CBD works with one of your body's biological systems known as the Endocannabinoid system (ECS). The ECS works to create balance and homeostasis in the body with appetite, mood, pain, sleep, and much more. The ECS also helps regulate stress and immune response.
Our bodies naturally produce cannabinoids which work within the ECS system. An important part of the Endocannabinoid system are Cannabinoid receptors (CB1 and CB2) which are able to receive signals from both the cannabinoids that the body produces naturally as well as cannabinoids that are produced in plants such as cannabis. Cannabinoid receptors are located all over your body. CB1 receptors are located in the brain while CB2 receptors are located throughout the body. Unlike its cousin THC, CBD does not directly interact with the CB1 or the CB2 receptors, so it does not cause the intoxicating effect that THC does. Instead CBD works indirectly with CB1 and CB2 by influencing the way they work. CBD also helps increase the body's own cannabinoids by inhibiting the enzymes that break down our own naturally occurring cannabinoids.
CBD also influences several non-cannabinoid receptors including opioid receptors, dopamine receptors, and serotonin receptors (which is currently being researched). Opioid receptors are responsible for pain regulation. Dopamine receptors are responsible for emotions, motivation, sensation and are the pleasure and reward centers of the brain. Serotonin receptors help regulate mood, appetite, digestion, sleep, memory, and more. The research is exciting for the future of how CBD can help with some of the most devastating problems such as opioid addiction and mental illness. See image below for a great diagram from leafly.com of how CBD affects different receptors in our body.