how do Mono works ?

As Sam intimated, it works much the same as Microsoft's .NET platform.

They have a Mono C# compiler which is written in C# itself (Microsoft's compiler is currently written in C++).

This produces Common Intermediate Language (CIL), which runs under the control of their version of the Common Language Runtime (CLR). It is converted 'on the fly' by their just in time compiler (JIT) to native code for whatever platform it's running on at the time. It can target; Linux, Mac OS X and Windows amongst others.

They have also built from scratch their version of the basic framework classes plus some additional stuff for Linux etc.