How does it work? Here’s how Piper Nillson explains it in her Color Theory course:

The color wheel provides an excellent system for understanding color relationships. It can also help you choose a color and its relative colors.

Let’s take a closer look at the relationships between the colors. The important thing to focus on is the lines. For example, look at the color red. The color directly across from red on this color wheel is green. Red and green are complimentary colors.

You can also use geometric shapes to create harmonious groups of colors.

An equilateral triangle, as formed by the primary triad, can be rotated around the interior of the circle to form triads of color:
 

There are other shapes you can use as well. An isosceles triangle, a rectangle, and a square all create very different harmonious groups.