To explain how content marketing works, we first have to agree on a definition. Unfortunately, I might've sent myself on a fool's errand -- I went through dozens of different iterations of a content marketing definition (including the somewhat flippant "content marketing is using content for marketing") and found none of them totally satisfactory. But I hate to let perfection get in the way of progress, so let's just get something down on paper so we have a basis for discussion:
Content marketing is a marketing program that centers on creating, publishing, and distributing content for your target audience -- usually online -- the goal of which is to attract new customers.
The most common components of a content marketing program are social media networks, blogs, visual content, and premium content assets -- like tools, ebooks, or webinars. Here are some scenarios to demonstrate the mechanics.