By definition, "life signs" are "vital signs" which is defined as:
Essential body functions, comprising pulse rate, body temperature, and respiration
Vital Signs - dictionary.com
So that's what the screwdriver is scanning for.
But as TV Tropes so concisely put it:
In Doctor Who, the sonic screwdriver is a piece of Applied Phlebotinum that can basically fix, break, lock, unlock, or otherwise modify anything you want. The only things it specifically can't do are unlock a deadlock seal, inflict injury or kill. Unless you're a Cyberman. Oh, and it doesn't work on wood. And it's vulnerable to hair dryers. And you can't triplicate the flammability of alcohol either.note It may not be able to inflict injury, but if you're dumb enough to let him near the sound system it can sure as hell hurt your ears. Oh, and one time, it was used to drive a screw.
Magic Tool - TV Tropes
So in reality (*cough*) its scans for whatever it needs to scan for to detect life. And usually that's completely unknown (and unnecessary to the story).
Any sufficiently advanced technology is indistinguishable from a completely ad-hoc plot device
— David Langford