The way it works is that the software essentially ignores all touch input that’s not accompanied by pressure information. This means that by syncing pressure info with touch input, the software can detect when the stylus is being used and ignore anything else, such as your palm resting on the screen. Since pressure sensitivity itself is of limited use for note taking (but invaluable for digital drawing), palm rejection is really the main reason why you would buy a Bluetooth enabled stylus if note taking is all you plan on doing.
I ran across a video by Wayne Hung on YouTube that shows the palm rejection in action, embedded below. It only shows the basic concept and not any actual note taking, but it does prove that it works:
I’ve been wanting to test out the Jot Touch and/or Pogo Connect for handwriting, but the $80-$90 price point is hard to justify when I haven’t really seen a need for palm rejection with the way I write on the iPad mini. I’d much rather see this technology be implemented in new an unique ways, for instance having the ability to automatically switch between read-only mode and annotation mode in apps like GoodReader (not to be confused with GoodNotes) depending on whether you use your finger or the stylus. If that feature was implemented, I would get one of these things in an instant.