There is a pump inside the head that is attached to the CPU, and a fan behind the radiator blowing cold air into it. The fan is variable speed just like a regular air cooler, most new motherboards have an optional CPU fan plug just for the pump (but it runs full speed all the time so you could just use an adapter to plug it into the power supply). These new liquid coolers are preloaded and sealed with 50/50 water/glycol so no worries about freezing or boiling. Some reports in reviews of defective units leaking, so I have been keeping an eye on it, so far no issues.
As for temps, with default CPU clock speeds it barely gets above room temp when doing normal stuff like web browsing. If I run a CPU stress test with 8 threads driving the CPU to 100% it goes to about 55°C (131°F). If I overclock to 4.3GHz the max temp goes to about 62°C. But the only application I have run so far that will use all 8 threads is Handbrake during a video conversion. Even a game like Skyrim only uses about half the CPU power and temps don't move much above idle.