The premise of an air-cooled engine is actually pretty simple: Let air flow over the engine to keep it cool. But since this article needs to be a little bit longer than that, we'll touch on a few more details (for my editor's sake, anyway).
Most modern cars use water-cooled engines with radiators, water pumps and hoses that circulate a water and coolant mixture throughout the engine. The heat from the engine is transferred to the coolant, and then the coolant is cooled in the radiator and sent back around again.
Air-cooled engines want none of this. They rely on good old-fashioned air to cool them down. To be fair, all engines are technically air-cooled because even water-cooled engines use air to cool the fluid in the radiator. But let's not split hairs.
Air-cooled engines have fins extending out from the engine to pull heat away. Cool air is then forced over the fins -- typically by a fan in cars. For aircraft and motorcycles, the vehicle's speed alone moves enough cool air over the fins to keep the engine cool.
Some air-cooled engines may also have ducts around the engine to keep air flowing to the hottest areas. Some aircraft engines may even have baffling systems that channel high-pressure air into the cooling fins.
Another design feature that keeps an air-cooled engine's temperature low is horizontally opposed cylinders -- they face away from each other and are spread farther apart than a typical water-cooled engine. This allows air to flow freely over the fins. Some air-cooled engines also make use of oil coolers to keep the oil temperature low.