Horses generally respond to human emotions authentically, honestly and without judgement.
They are highly social animals and so highly attuned to the emotional and energetic state of others. Not just horses.
Humans and Horses share core mammalian emotional behaviours and motivations. Their social intelligence has a natural awareness.
To explain the horses' reactions simply - they move towards or away from. Emotions in all mammals are motivators, those motivations offer rewards or threats. We are drawn to the rewards and or move away from threats. The horses' behaviours are essentially scales of approach or retreat, do they want more of something, or to move away from it. It is the role of the facilitator to work with these actions on the part of the horse(s).
Some of the best work on this subject common emotional behaviours was carried out by Jaak Panskeep in his book Affective Neuroscience. Watch his Ted x talk.