Sound waves at about 40 kHz are emitted from the instrument's transducer travel through air to the liquid then bounce back to the detector.  Based on the time-of-flight or transmission time the instrument determines the level of the liquid in the vessel.  Time between transmission and reception of signal divided by two yields time of travel one way.  This is multiplied by the speed of sound to report distance.

Accuracy is affected by the temperature and atmosphere in the vessel, because the measurement is based on the speed of sound.  The speed of sound is gas-molecule dependent.