Special monitoring software keeps an eye on the connection between the honeypot and the rest of the network.
A honeypot won't contain production data or participate in legitimate traffic on your network - that's how you can tell anything happening within it is a result of an attack. Norton's simple definition of a honeypot is a good starting place: "A honeypot is a computer or computer system intended to mimic likely targets of cyberattacks." Often a honeypot will be deliberately configured with known vulnerabilities in place to make a more tempting or obvious target for attackers. It's one of the oldest security measures in IT, but beware: luring hackers onto your network, even on an isolated system, can be a dangerous game.
A honeypot is a trap that an IT pro lays for a malicious hacker, hoping that they'll interact with it in a way that provides useful intelligence.