RDF's work by pointing a directional antenna in "various directions" and then listening for the direction in which the signal from a known station came through most strongly. This sort of system was widely used in the 1930s and 1940s. RDF antennas are particularly easy to spot on German World War II aircraft, as loops under the rear section of the fuselage, whereas most US aircraft enclosed the antenna in a small teardrop-shaped fairing.
In more recent times the task of finding the signal has been automated in the automatic direction finder, or ADF. In this system the antenna consists of a small cylinder of wire, a solenoid that is highly directional, which is spun by a motor. The electronics listen either for the repeated "peak" in the signal, or just as commonly, the "trough" when the signal drops to zero when the antenna is at right angles to the signal. A small lamp attached to a disk is timed to spin at the same speed as the antenna, so when the peak or trough is detected the lamp flashes briefly. To the human eye it appears to be a single spot of light on top of a compass rose.
Signals are provided in the form of radio beacons, the radio version of a lighthouse. The signal is typically a simple AM broadcast of a morse code series of letters, which the RDF can tune in to see if the beacon is "on the air". Most modern detectors can also tune in any commercial radio stations, which is particularly useful due to their high power and location near major cities.
RDF was once the primary form of aircraft navigation, and strings of beacons were used to form "airways" from airport to airport. In the 1950s these systems were generally being replaced by the VOR system, in which the angle to the beacon can be measured from the signal itself, with no moving parts. Since the signal being broadcast in the RDF system is non-directional, these older beacons were referred to as non-directional beacons, or NDB in the aviation world.
Today all such systems are being generally removed in favour of the much more accurate and user-friendly GPS system. However the low cost of ADF systems today has meant something of a comeback, whereas the expensive VOR systems will likely all be switched off before 2010.