The working principle of Lithium Battery refers to its charging and discharging principle. When charging the battery, the lithium ion is generated on the positive electrode of the battery, and the generated lithium ion moves through the electrolyte to the negative electrode. As the anode carbon is layered structure, it has many micropores, and the lithium ion which reaches the negative electrode is embedded into the micropores of the carbon layer. The more the embedded lithium ion is, the higher the charging capacity it has.
Similarly, when the battery is discharged, the lithium ions embedded in the negative carbon layer are removed and moved back to the positive electrode. The more lithium ion goes back to the positive electrode, the higher the discharge capacity. What we usually refer to as Lithium Polymer Battery capacity is the discharge capacity.