Small electric winches work by using different gear ratios to convert rotational energy into torque, which allows a winch to pull heavy loads. Manual winches work using the exact same physical principle, but electric winches use small electric motors to turn the gears, while manual winches use human effort.
All winches work by using a small, rapidly turning gear to turn a larger gear. When the small gear turns quickly, it causes the larger gear to turn, albeit much more slowly. While the larger gear does not turn as fast as the smaller gear, it does so with a much larger amount of torque. The large amount of torque allows the winch to pull a much heavier load than if the spool were connected to the small gear alone.
Many small electric winches have multiple settings that use different smaller gears to turn the larger gear. The difference in the number of cogs on the smaller gear versus the larger one creates a number called the gear ratio. A gear ratio gives an idea of how much torque the gears produce. A lower gear ratio creates a larger amount of torque, but it causes the gear train to turn more slowly. A high gear ratio causes the system to turn quickly, but produces a small amount of torque.