A polygraph uses two contacts which are placed two fingers of your hand, a 
tube-like device which is placed around your sternum and blood pressure wrap 
around your arm.

The contacts measure the amount of conductivity in your fingers.  When we 
sweat, water is deposited on your skin.  The contacts measure the difference 
in resistance between when you are in a calm, normal manner and when you are 
nervous.  The more nervous you are the more you naturally sweat and the less 
resistance there is as water is a great conductor of electricity.

The tube around your midriff measures your rate of breathing and a few other 
things.  When you are relaxed you breathe in a slow, rhythmic manner.  When 
you are nervous you expand your chest more as you draw in oxygen.

The blood pressure wrap is just like the one used in a doctors office.  As 
you get nervous, the blood flow in your body increases.

The problem with a polygraph is multi-folded.  First, when you take the test 
you have to sit still.  You can't move around or the results are skewed.  So, 
if you sit there and make a conscious effort not to move, the results aren't 
right.

If, while taking the test, you experience a sudden chill up your back, that 
will show on the results and again, skew the results.

Another problem with polygraphs is interpretation.  The person reading the 
wavey lines has to determine what they are seeing based on the questions they 
asked you.  Even a small misinterpretation can condemn or exonerate a person 
taking the test.

Finally, one can be completely honest when answering the questions yet still 
fail.  How?  Because one is so calm and relaxed when answering the questions, 
the machine records this information.  Yet, because it is designed to record 
anomalies in your bodily reactions, it doesn't know how to deal with honesty 
which would produce no anomalies.  In this way, the interpretor looks at the 
results, doesn't understand why your readings are the way they are and 
believes you are trying to either hide something by using variuos techniques 
or that you are simply lying and this is what your results will look like.