In my office lights turn on automatically when I enter the room how does it know that I am in the room?

Most likely the room has some sort of motion sensor to tell if someone is present.

A heat sensor can tell if a person is in the room by the heat generated by the human body. A sound sensor can respond to noise made by a person walking, talking or otherwise. Either will work.

The triggered sensor can turn on the lights or anything else electrically. The lights are usually attached to some kind of timer so that if no activity is detected in the room for a while, the lights are turned off until the next time the sensor is triggered.