It uses leverage, kinda like a curb bit.... it works on the nose and the poll....
Here's something from www.completerider.com
I did not write this, hehe
A bosal works on a little bit different method than hackamores. It does not have shanks to which the reins are attached on either side of the horse’s mouth. A bosal is usually woven from braided horsehair into a hard loop that slips over the nose, a headstall to hold it in place, and a large knot beneath the chin. The reins come directly from the knot beneath the chin, and are part of the bosal nosepiece.A cowboy’s bosal was often a source of pride, especially if he had woven it himself. Sometimes bosals have rawhide or rolled leather nosepieces with reins of leather or horsehair.
Since the bosal does not have shanks, it does not apply pressure to the cheeks as the hackamore does, although it does apply pressure to the nose and the chin. Being kinder than a hackamore and without the effect of a bit, a horse working in a bosal must be very well trained and obedient. "