Capacitance determines the dielectric constant (Ka) by measuring the charge time of a capacitor, which uses soil as a dielectric medium. The charge time of the capacitor is a linear function of the dielectric permittivity of the soil. Capacitance sensors measure the dielectric constant of the soil in order to find its water content. Since the dielectric constant of water is much higher than that of air or soil minerals, the dielectric constant of the soil is a sensitive measure of water content.
The sensor applies a voltage and creates a circuit (flow of electrical current). This current will oscillate or vibrate at a (resonant) frequency that is dependant on the amount of water in the soil. When you add water to the soil its ability to hold charge (capacitance) changes, which then changes the vibration (resonant frequency) of the circuit.
The probe measures this change in (resonant frequency), and uses it to determine the soil moisture content.
Because of the difference in the dielectric constant between water and air and the very small amount of soil the sensor evaluates, any air gap around the sensor will cause large errors. Capacitance sensors need to have excellent contact with the medium they are measuring with no air gaps.
The volume of measurement is dependent on sensor size with most sensors in the order of 5cm to 10cm in length but one sensor is 3m in length. The field of influence is greatest at the sensor to substrate interface and declines rapidly from there. Generally, the field of influence is approximately 1cm distance from the sensor. Given a 3m length sensor with 1cm distance into the soil, extreme caution needs to be taken with installation to ensure no air gaps.
The advantage of capacitance sensors is the cost of the electronic components is relatively low. Because of this, they are the most common fully electronic soil water sensors for non-critical moisture measurements.