The iPhone has on-board accelerometers and a speed detector for the GPS. Using the speed detector, Mayday knows that you are moving. It then uses the accelerometers to detect a sudden decrease in speed which is a very good indicator of an accident. It then sends a message to whomever you programmed it to send to, email or SMS.
So the app will send SMS to the one I programed to receive a notification every time I stop in a traffic light for 5mn? Or when I arrive to my destination and decide to stay in the car waiting for the wife to off her job and come in the car so we can go home, the app will be sending SMS or email all the time?
I personally don't know anything about the app; however, I do know about Physics. The iPhone could easily measure the g-force it is subjected to, and trigger the app to send a message when a certain g-force is exceeded. However, you would need to be careful when using the app, because if you drop your iPhone, the sudden impact of the iPhone hitting the ground could simulate the same g-force subjected during an accident.
Do the airbags in your car go off every time you stop at a red light?...no, because the sensors in your vehicle operate the same way - a threshold g-force must be overcome before the airbags are tripped. I reckon this app works the same way (taking advantage of the built-in accelerometers on the iPhone).