We use combination of many different techniques incorporated into our SDK, so there is no one specific formula - think more about it as a "driver" for the physical-location and communication device (e.g. iPhone).

The major role is played by beacons. Since we manufacture them we have a full control of the entire physics behind the signal propagation. You can read more here about it: http://blog.estimote.com/post/106913675010/how-do-beacons-wo...