How does dowsing/water witching actually work?

Answer 1

The truth is... nobody knows for sure. Wikipedia.org has some information on a couple studies. Here's an excerpt from the article.

"Skeptics of dowsing and many supporters of it believe dowsing apparatus has no special powers but simply amplifies small but otherwise imperceptible movements of the hands, which has long been established to be the ideomotor effect. Most investigators believe the small movements arise from the expectations of the dowser. Supporters say the dowser has a subliminal sensitivity to the environment, perhaps via electroception, magnetoception, or telluric currents.

Some say dowsing is better classified as a paranormal belief than as pseudoscience. In pseudoscience, scientific sounding jargon is used and explanations are unable to be supported scientifically. Dowsers however cannot explain the source of their powers apart from magnetic fields and auras, and simply 'believe' they can dowse, making it more a matter of faith than science. While every dowser who has ever tried to prove his/her claims in controlled experiments has failed, most continue to believe in their abilities."

Answer 2

Hi. Not a believer, but the dowsing stick seems to point down when over moist land.