It creates a popup menu of Players/NPC's by using your combat log, mouse-over, and/or minimap. You can 'left-click' the buttons to target or 'right-click' to target AND announce their position to a specified channel.
More detailed answer:
By using 'Sentry Mode' you will get enemy player targets to appear on the popup automatically if they do anything near enough to you that your combat log reports it. Also, the popup does more than just allow you to target and announce things. It can keep track of targets over time and adjust the background color fade to let you know which is more recently active (darker is higher priority). It removes dead targets (optional) and adds new targets as they appear. It will also update targetted and moused-over targets health (shown by how filled the colored bar is). It can keep track of all damage taken from enemies and you can also add enemy player targets to your own 'Hit List', which will give you extra warning if they appear on your popup.
Complete FAQ and version history is available here in My Portal