I have Avid Elixir brakes on my mountain bike. They are the only
part of the bike that's a total black box to me. I understand
the principle behind disc brakes, and I understand the principle
behind hydraulics. I could draw a diagram of how this all goes
together. That said, I've been told that they automatically
adjust for wear on the pads, so as the pads wear down, the
braking action is the same. Part 1 of the question: Is this
true? Part 2: How the heck does it work? I think the answer he
was looking for was how they adjust as the pads get worn. There
is a check valve in the master cylinder, that will allow enough
fluid from the reservoir when the lever is pulled. If more fluid
is needed because of pad degradation, it passes it into the
active system. Therefore with more fluid in the system, the
piston is pushed out slightly more and the pad is the same
distance from the rotor. That is why your res. needs to be
topped off occasionally. Many high end hydraulic systems on
bikes are very much the same design