The Photo Electric smoke detector in effect sees smoke and works on either the principle of light scattering or obscurity.  

The Light Scattering Smoke Detector contains a black chamber and inside the chamber is a light emitting diode (LED) and a light sensitive receiver unit called a photo cell.  Between the LED and the photo cell is a black wall.  This wall stops the the light being emitted by the LED from reaching the photo cell.  When smoke enters the chamber the light to reflects of the smoke inside the chamber.  When enough smoke has entered the chamber the light is reflected around the wall and shines upon the photo cell.  The photo cell has a voltage applied upon it.  When the photo cell is dark it has a resistive quality that allows a small reference voltage to pass,  when the light shines on the cell the resistance lowers allowing more voltage to cross.  The electronics inside the detector senses the higher voltage and causes the detector to go into alarm.  

The Light Obscuration Smoke Detector contains a chamber which has both an LED and a photo cell.  In this case the light is emitted directly on the cell.   This creates the reference voltage across the photo cell.  When smoke enters the chamber some of the light is reflected and some absorbed this causes less light to be received by the cell and changes the voltage.  The electronics inside the detector sense the change in voltage and cause the detector to go into alarm.