By Compressing refrigerant in the form of a vapor, the temperature of that refrigerant is increased.  Heat pumps use this concept to pull heat from an area where that heat is unwanted and release that heat in an area where it IS wanted. 

In the summer, heat is absorbed by the refrigerant in the internal coil.  This heat is then transferred through the refrigeration cycle by manipulating pressure and by changing the state of the refrigerant from gas to a liquid.  In the summer, the outside unit acts as the condenser.  When the refrigerant condenses from a gas to a liquid, the heat stored in the refrigerant from inside the home is released into the atmosphere outside the home.

In the winter, the process is reversed.  It can be hard to believe that there is heat outside when the snow is falling and your teeth chattering, but there is!  As a matter of fact, there is approximately 460 degrees of heat Fahrenheit even when your thermostat reads 0 degrees.  This is because you are still actually 460 degrees ABOVE absolute zero.  It might seem cold to you, but according to mother nature, there is still 460 degrees of heat to work with.  The kind of refrigerant used in a heat pump literally boils even at 0 degrees Fahrenheit.  In doing so, it absorbs heat from outside and releases it inside your home in order to keep you warm.  Crazy huh?!