How do Python properties work?

As others have noted, they use a language feature called descriptors.

The reason that the actual property object is returned when you access it via a class Foo.hello lies in how the property implements the __get__(self, instance, owner) special method:

• If a descriptor is accessed on an instance, then that instance is passed as the appropriate argument, and owner is the class of that instance.
• When it is accessed through the class, then instance is None and only owner is passed. The property object recognizes this and returns self.

Besides the Descriptors howto, see also the documentation on Implementing Descriptors and Invoking Descriptors in the Language Guide.