How does the water sensor in iphone 4s work?

Dos it go away or does it stay red forever?

If you mean the water indicator sticker? It stays red forever. If it changes back, it would defeat the purpose of having it. It's standard on all phones made by major manufacturers.

It's meant to allow who ever is looking at the phone to know at a glance, whether the phone has ever been exposed to water. The reason being that water damage is not covered under warranty.

It's also quite helpful for buyers of used or refurbished phones. That is, if the indicator sticker is red or pink, or outright missing, don't buy it.

This means if you are using your phone in a humid environment, steam room, shower, sweaty pants pocket, one or more of the moisture sensors in the phone, may turn red. So the phone itself never has to actually come in contact with liquid or get dunked in a toilet, swimming pool or washing machine, for them to turn red an void the warranty.

The "water sensor," on all these cell phones, is nothing but a little piece of paper with some chemical in it that turns red when it gets wet. Yes it stays red forever.