What is the working mechanism of Shimano Power Modulator?
There appears to be a couple of things that Shimano calls 'Power Modulator'. I think the I think the basic idea of both is to prevent inexperienced riders from over-braking and losing control.

If you are talking about coaster brakes, it's basically a clutch which limits braking force. https://bike.shimano.com/en-EU/technologies/component/details/power-modulator.html

There is a mechanical disc brake version too which changes the lever ratio as the brakes are applied.  https://bike.shimano.com/en-EU/technologies/component/details/power-modulator-unit.html