How do read receipts work on iPhone?

Does the read receipt show it's been read when they read the text, or when they read the notification of the text? Cos the notification is half the text.

It works when they read the text in the Messages App.
If you send them a message, and they only see the Notification of it, your iPhone will still say "Delivered" until they read it.
Now keep in mind that the other person has to have Read Receipts enabled. If it is only enabled on your iPhone, then they'll be able to see when you've read their message(s).

It lets the person you texted know when you have read the text they sent you

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