How does it work?
Lowering the carbs helps to balance blood sugar levels. There are all sorts of lower-carb "diets" out there... the "trick" is, it's not a quickie weight-loss diet, it's a lifestyle diet... that is, you don't go low-carb just to lose weight, and then go back to high-carb eating... you eat a lower-carb diet permanently. The nice thing is, if you are overweight, balancing that blood sugar, and not consuming the sugar and starches helps you lose, and then maintain a healthy weight. The protein in the diet helps you maintain lean muscle mass.
If you follow a set plan, such as Atkins, you actually go through phases... the first of which, induction, is often mistaken for the whole diet. In induction, you cut out all sugars, starches, white flour, etc., and limit your carbs to a list of allowed vegetables (salads, non-starchy veggies, veggies low on the glycemic scale). And, yes, you can eat steaks, bacon, butter (which is much better for you than margarine), cream, etc. When you first start low-carb, especially if you're trying to lose weight, the dietary fat without the carbs actually helps the weight-loss aspect. In the first stage, fats and calories don't matter as much as carbs. You're basically re-adjusting your body's settings.
As you progress through the stages (speed depending on whether you're low-carbing for health or for weight loss), you begin adding more "good" carbs back in to your daily diet. In the final phase, maintenance, you're eating whole grains, fruit, and the occasional potato or starchy vegetable. You also cut down on the fatty foods. You do NOT however, go back to white bread, french fries and Twinkies. Moving from stage to stage is what teaches you to eat healthy. It's what makes it a lifestyle diet.
It's a sound concept... but very much misunderstood. Most people consider it to be a "eat-all-the-fat-you-want" diet, with little nutrional value. They don't look past the strict craving-breaking induction to see the "real" diet. It's a healthy diet for diabetics, hypoglycemics, people who suffer from Candida, and quite a bit of the general population.
It boils down to eating "whole" foods (meats, veggies and fruits), and cutting out those refined foods that are so prevalent in our society, and so nutrionally empty.
If you follow a low-carb diet, you don't have the blood sugar swings, which cuts down on energy swings, mood swings, and cravings. After a while, you're not eating as much as you would on a low-fat or low-calorie diet, because you're simply not as hungry... you stay satisfied longer. The foods you do eat are all low on the glycemic index (higher glycemic = higher insulin/blood sugar levels). Maintaining lean muscles mass, avoiding those sugar spikes and drops... that's what makes it an ideal diet for both weight-loss, and for a long-term lifestyle.
Does it work for everyone? No. But neither does anything else. Everyone's different. Low-fat doesn't work for everyone.
You'd probably be amazed that you can live without pasta, bread or potatoes... but getting past those cravings isn't easy.
There are people out there that have lost 100+ pounds, and kept it off for years. They're healthy, and they do eat carbs - but good carbs. If they went back to eating processed junk, chances are they'd gain weight again. Same as those people who lose weight with Weight Watchers, and then go back to eating Snickers and ice cream and gain their weight back. There are those people that didn't need to lose weight, that eat low-carb just to maintain their health. It really is a natural whole-food diet.