That looks like a type K thermocouple, and works via the Seebeck effect. This means that the junction between to different metals will generate a voltage depending on the junction temperature. There are two wires of different metals, and these are welded at the end. This forms the junction. Any metal between the junction and the jacks (eg. plating) will create a new thermocouple, so if there's a temperature gradient, this will cause errors.
There are also resistive temperature sensors, these are actually superior, but more expensive. Type K (there's also a type J and a lot of others) is the cheapest and most common thermocouple.