How does a potentiometer work?
Here's a simple experiment you can do:

Find a pencil with a soft lead (2B or something). Make a dark, thick rectangle on a piece of paper about 5cm x 5mm or so (a long strip). Using a multimeter set to measure resistance, put one test lead at the very edge of the rectangle you drew, and measure different points along the strip using the other test lead. You should read lower resistances as the two leads are closer together.

A potentiometer uses a similar strip of resistive material (carbon, for example) to provide varying amounts of resistance, based on the distance between two connections to the material.