It works based on detecting atmospheric pressure. You start by knowing the elevation of where you are. i.e. you need to know how high the land is where you are from sea level. Most mechanical altimeters have a small knob on them that allows you to make adjustments based on the current barometric pressure and this his how you calibrate it. You set the altimeter to the current barometric pressure and make sure it matches your current elevation.
The higher you go up in altitude, the lower the atmospheric pressure, this is why your ears pop when you go up in an elevator. Altimeters sense this difference in pressure through either an electronic pressure sensor or a device called a bourdon tube. It’s basically a small tube of metal that’s formed into an arc. As the pressure around the tube changes, the tube flexes and changes shape. The tube flexing pushes against a lever that turns some gears attached to a dial to show your current altitude.
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