When the water level reaches to Point A in the tank, the positive side of the battery gets connected to the base of the Transistor Q1 through the water. So when a positive voltage has been applied to the base of the Transistor Q1, it gets into ON state and current starts flowing from collector to emitter. And RED LED glows.
You can see resistors (R1, R2, R3) at the base of each transistor, which is used to limit the maximum Base current. Generally a transistor gets its ON state fully when a voltage of 0.7 V is applied to the base. There are also resistors (R4, R5, R6) with each of the LEDs, to drop the voltage across LEDs, otherwise LED may blow up.
Same phenomenon happens when water level reaches to Point B. As soon as water level reaches to Point B, a positive voltage gets applied to the Transistor Q2, it gets ON and current started flowing through YELLOW LED, and LED glows. With same principle, GREEN LED glow when water level reaches to Point C.And finally Buzzer beeps when water level reaches to D.
Data Glove Controlled Mouse for Multiple-Computer Systems