There are theories on how exactly homeopathic medicine works. As supported in major clinical trials and in practice, it is believed to be working by stimulating body’s own healing mechanisms.
For example, in case of diseases which are caused by infection, it seems to be working by stimulating the production of antibodies, defense blood cells, etc.
In cases of immune diseases, it seems to be working by correcting underlying immune mechanism.
In case of painful conditions, by activating body’s anti-pain mechanisms.
Similarly, its action must be on the lines of being antispasmodic, anti-allergic, immuno-modulatory, anti-inflammatory, hormone stimulatory, anti-carcinogenic, etc.
Large scale studies alone will allow full exploration of this young science. Homeopathy is future medicine subject to profound research.