Selection sort works by repeatedly finding the minimum element from the unsorted section of an array and placing it at the beginning. It maintains two subarrays - the sorted section and the unsorted section. In each iteration, the minimum element from the unsorted section is selected and swapped with the element in the sorted section. The algorithm has a runtime of Θ(n2) and is an in-place sorting algorithm. An example is provided to illustrate the steps of selection sort on a sample array.