I'm guessing it's through MathML. MathML is a W3 standard technology for representing math as XML in documents. It's used on the web, and this thread seems to suggest support in Kindles.
I tried verifying it by visiting a webpage with MathML demo (note: Chrome doesn't support MathML, visit it on Firefox) and it didn't render well on Kindle. Though that may be a limitation of Kindle's experimental browsing rather than its ebook rendering
Does .mobi
or any other file format supported by Kindle support math display?
If yes, then is it through MathML or some other technology?