Radar Altimeter works on the radar principle, a beam of pulses is send in all directions from the transmitter, the beams hits the target and a proportionate amount of transmitted energy returns back to the transmitter/receiver which has stopped transmitting and is now ready to receive the beams.
The range (distance) is calculated by Transmitter/ receiver which calculates the time taken by the beam from the time it leaves the transmitter and to the time it is received at the receiver.
The modulation used is Pulse Modulation.
It gives height indications up to 25,000 feet.