"Water, fire, air and dirt,
Pinhole cameras, how do they work?"
Same way magnets work: Miracles.
That is precisely how I would have answered the question. Of course, I would have followed up with "But really, the light from an object passes through the aperture, getting inverted along the way, until it hits the paper or film and produces an image." I mean, defining focal length, f-stop and diffraction and all that jazz is fun, but most of the time people are either wondering about why you're standing there with a Quaker Oats tin, or they're trying to tell you that you've left your body cap on.