Scales typically do this by sending a weak electric current through your body between two metal contacts, one for each of your feet. Different kinds of tissue have different levels of resistance so by comparing the resistance of your body and your weight it can estimate your body fat percentage.
This estimate is not particularly accurate, having a typical error of around 3-4% higher or lower. It may be better than nothing but that kind of accuracy can probably be obtained just by looking at the person.
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