Capacitance Level Transmitters, take their name from capacitors. In other words, the electrical circuit element that temporarily stores energy for a circuit to use.
Capacitors store energy between two insulated electrodes. A non-conductive medium is placed between the two electrodes to help store electrical charge.
The more dielectric the medium, the more energy can be stored.
So capacitance level transmitters therefore use the liquid in a tank as a dielectric medium between two or more electrodes.