How does a blackberry know to shut off in the pouch?

I have a blackberry Curve 8330 that came with a black leather pouch to carry it in. When I stick my phone into the pouch it turns its screen off when I pull it out the screen comes back on

How does it know to do that?

The Case is magnetic and so is the device.
So when the BB is placed inside the pouch, it locks the screen and the keys so it prevents it from calling or emailing someone you don't want to.