Well judging from it Pokedex entries, Signal Beam confuses the target by attacking the target with a bright flashing beam of light. So basically the bright light sort of stuns the target and confuses it.
RSE- A strange beam attack that may confuse the foe. FRLG- The foe is hit with a flashing beam that may also cause confusion. Colo.XD- Fires a peculiar ray that may confuse the target. DPPtHGSSBWB2W2- The user attacks with a sinister beam of light. It may also confuse the target. XY- The user attacks with a sinister beam of light. This may also confuse the target.
Signal Beam has a 10% chance to confuse in the games.
Source: http://bulbapedia.bulbagarden.net/wiki/Signal_Beam_(move)
Hope I helped :)
Are you asking about in-game, or how it would work in real life?
In- game it has a 10% percent chance to confuse.
In real life, I'm thinking it confuses the Pokemon with the different colors the weird noises.
Hope I helped.
