Sorry bit lengthy,but might be useful information to people without fitbits.
This type of fitbit device basically records three types of information :
1) Steps taken
2) Heart rate
3) Time
The device will take a sample of the heart rate every 5 seconds, unless you are doing an "activity" such as running , in which case it will record every second. You can trigger an activity either manually by pressing the appropriate button to start and stop or the device will attempt to automatically recognise an activity by changes in the heart rate, or an increase in the number of steps.
The fitbit will calculate the length of the run by multiplying the number of steps by stride length (which can be calibrated), so this method isn't as accurate as GPS, but in my experience is within 15% accuracy.
The fitbit stores this data locally on the device, and will store about 7 days worth, and then start overwriting the oldest data. Generally people want to store the data longer term to track progress etc so you need to sync the data with another device.
On an iPhone, you would download the fitbit app onto the iPhone, connect to the fitbit by bluetooth and it will ask you to pair the device by the fitbit sending a number which you enter on the iPhone.
Now the device is paired, syncing can occur automatically in the background as long as the fitbit is close (say <10 metres), I believe as part of syncing the data will be uploaded by the fitbit app on the iPhone to fitbit servers. Once it's stored on fitbit's servers you can view the data on other devices by logging into your fitbit account.
Now, whilst the fitbit can sync automatically in the background, a lot of people turn this off and decide to sync manually, the main reason is that battery life takes a hit on both your fitbit and iPhone. In my case the fitbit's battery went from about 5 days to 1 day ! so I would typically sync once I got back from a run.
Note that at no point does the fitbit device record your location or "ping" wifi devices or cell towers, so you can't "track" a fitbit device, fitbit data is as I stated at the beginning, limited to time, steps and heart rate.
Now the story changes if you run with your iPhone as well - which I'll post separately if people find this useful....