Haven't actually gotten around to deploying one yet, but the concept is that you create a mixture with a known KH state (using distilled water and baking soda) so that when it turns green you have your 'desired' CO2 PPM state. As there are lots of things in a tank that can throw off the standard CO2/KH/ppm chart (which I've wrestled with for years), this small container creates a fixed state where you can measure the CO2.
Folks adjust the KH level so that the green state of the drop checker indicates different CO2 PPM levels. If I recall correctly, with a KH=3 green implies CO2=30 PPM. If KH=4, then green implies CO2=45 PPM.
Thems the basics as I understand them,
Brian.