F.lux uses both the type of light in the room you're in and the time of day as points of reference. You can select halogen, fluorescent, or natural light to get greater precision.
To pinpoint your geographical setting and time zone, the program needs your coordinates, which you can find using the Set Your Location function. This will redirect you to a webpage that lets you confirm where you are.
Finally, just indicate if you want a fast (20 seconds) or a slow (60 seconds) transition between the color tones used on the screen.