An excerpt from ScienceIQ.com:
Most warmers work through a simple chemical reaction similar to rusting that occurs when warmers are exposed to air. That is why keeping them under wraps until needed is a must. The warmer is a mixture of iron, water, cellulose, vermiculite, activated carbon and salt. When the iron in the warmer is exposed to oxygen in the air, it oxidizes. In the process of doing so, heat is created. The salt acts as a catalyst and the carbon helps disperse the heat through the warmer. The vermiculite acts as an insulator, keeping the heat from dissipating too rapidly, while the polypropylene helps the air to mix with the ingredients while holding in moisture. The chemical reaction occurs slowly enough to allow the warmer to last for hours. But eventually all the iron is converted to iron oxide and the process stops. So don't expect to see hand warmers replacing central heating anytime soon. But for a cold day, this simple chemical reaction can do the trick.