The ink is made up of a bunch of tiny spheres, about 120 nanometers across, that contain "the glucose detecting molecule, a color-changing dye, and another molecule that mimics glucose." Those molecules are moving around in the spheres, and when they near the surface, they grab onto either glucose or the molecule that mimics glucose. If they mostly latch onto real glucose, the ink (and consequently the tattoo) will look yellow, but if they grab the fake glucose, the tatt will look purple, indicating a low level of glucose in the bloodstream.
Apparently the tattoo itself doesn't need to be a full-sleeve naked pirate lady design or anything; it can be only a few millimeters across and get the job done. The tech is still a couple years off, but it's a much more immediate and constant monitor of the blood than having to prick and swab a few times a day. [Crunchgear]