Polarization: A Technical Explanation
Cholesteric liquid crystals naturally decompose unpolarized incident light (that has a wavelength
close to the pitch of the liquid crystal) into its circular components.
The component of circular polarization that rotates in the same sense as the cholesteric medium is reflected,
while the complimentary component is transmitted.
This page explains in greater detail the nature of light and polarization.
Electromagnetic (EM) radiation (light) is a mutually perpendicular oscillating electric (E) and magnetic (M) fields in a plane transverse to the direction of propagation (see an example in the figure below). Light polarization is a macroscopic manifestation of the vectorial nature of the E-field.
Natural light is usually unpolarized and can be thought of as containing, for example, linear oscillating E-fields distributed equally over all possible directions. Unpolarized light can be polarized by means of reflection, refraction or absorption. Polaroid absorbing polarizers (in a dark sheet format) are frequently used for such purposes. Note, however, that the absorption entails a loss of at least 50% of the light.
In a linearly polarized light beam the oscillation direction of the E-field is the same (up to a ± sign) everywhere. At a given point in space one can imagine the E-field oscillating along a line (the polarization direction) with a varying length: from +E to -E and vice versa. The following drawing depicts schematically a snapshot (time is "frozen") of a linearly polarized beam (in the Y-direction) propagating along the +Z direction.
    
Linear polarization
The EM-field is transverse: the E-field oscillates in the xy-plane, which is perpendicular to the propagation direction (z-axis in the drawing above). A general E-field at a given point in space is a vector in the xy-plane, which over time can change direction and magnitude. Such a vector can be describes as a superposition of two linear vectors (the basis) like (Ex, Ey), the components along the x-axis and y-axis respectively. Such description uses two linearly polarized electric fields to describe a general E-field. By varying the relative length of these components as well as their relative phase one can generate all possible polarization states.