Irons are rather simple in how they work. They work like an electric heater. They have a heating element made out of a metal alloy that gets hot when electricity is applied. Wired in series with the heating element is a thermostat. The thermostat is made of two electrical contacts that are designed to bend away from each other as the iron gets hot. The knob turns a screw which control how hard the contacts must bend to separate and break the electrical connection. The higher the thermostat is turned, the hotter the iron must get before the electrical contacts separate. Then when the iron starts to cool, the contacts make connection again, thus keeping the iron steadily at the desired temperature.Basically you apply a voltage to a load (the iron's heating element) which induces a current. The current through the load generates heat according to the formula Power = Current^2 * Resistance.