It recognizes, and produces obfuscated active (click-to-send) email links for,

• standard email links
  <a href="mailto:you@example.com">Your Name</a>
  written as html (not in visual editor). It will appear as
  Your Name  (youexamplecom)  
  It will pass on class and style attributes; other attributes, both before and after href, are allowed and ignored.
• the special “easy to write” form 
  [EMAIL Your Name | you@example.com]
  This can be written with the visual editor, and will appear as
  Your Name  (youexamplecom)  
  (The old version [Your Name] you@example.com remains available, if desired.)
• a bare email address you@example.com (with or without “mailto:” in front of it) — written in visual editor or html

Each of these will appear as a standard email link. Those with a “Your Name” will look like Your Name  (youexamplecom)  . A bare email such as you@example.com, without an associated “Your Name”, will appear as a link with characters or graphics in place of “@” and “.”, either your©example•com, if characters are chosen, or yourexamplecom, if glyphs are chosen.

This is accomplished with a combination of WordPress filter hooks and JavaScript. If the browser is JavaScript-enabled, visitors to the site will see active email address links. If JavaScript is not enabled, hovering over the “link” will bring up a popup showing the email in human-readable form, eg you [@] example [.] com.  The [@] and [.] are  graphic images, not text, so the parts of the address are separated by lengthy runs of html (<img … />).

The email addresses occur in the HTML source only in a well-hidden encoding.  The email address is converted to hexadecimal and appears only as the value of a JavaScript variable.  That encoded email is separated in the JavaScript from the telltale “mailto:” to further confuse spambots.  The no-JavaScript popup address is encoded in the JavaScript with graphics representing “@” and “.”, so even a fairly smart spambot will not be led easily to the address.