Battery Detector?

I am new in electronic.. recently, i saw my friend's project with a interesting stuff - his digital compass with a lcd module that have a function to show the energy remained in the battery!! i wanna ask that, it functions as a battery detector... the main part to do so is in software or hardware? can anyone explain the principles ..? How can it operate?

Both. You need to test the batteries output voltage when it's under load. If the load is known a curve can be plotted with the voltage that indicates the charge state of the battery. This curve is NOT linear.