How does the watch function pass on arguments?

Regarding the ‘detecting direction of mouse’ tutorial, heres a small cut part:

checkX = function (dx, oldVal, newVal) {
	if (oldVal < newVal) {
		dir = "right";
	} else {
		dir = "left";
	return newVal;
};"xdir", checkX);
this.onMouseMove = function() {
	xdir = _xmouse;

There are 3 arguments (dx, oldVal, newVal) - now what is passing values into these 3 arguments? Doesnt seem like an average function call to me. Especially newVal, what is making newVal figure out the new _xmouse? How does the passing of arguments into your function work?