From the point the recorder is powered up, any sound coming in from any input is always being processed whether you are recording or not. So when pre-record is enabled, that processed signal can be held in a buffer that is constantly being refreshed. When you press the RECORD key, all audio stored in the buffer will be included the current take with the corrected time code. Since the recorder is always processing the incoming audio no additional battery power is use when prerecord is engaged.
The pre-record buffer is dumped after any of the following settings are changed: