Fruit ripens as it decays, and it decays faster with heat. When fruit decays, it releases heat, as well as chemicals. The heat given off by the fruit is trapped in the paper bag, and adds to the decay process.
Banana's are a bit special, the chemical released when they decay causes bacteria to replicate faster, causing more heat, and more ripening.
This may sound a bit gross when you think of eating it, but we need that bacteria, which is why we like fruit. Just dont forget the fruit in a paper bag for too long. I've used the trick on apples, oranges, pears, peaches, nectarines, etc and it's worked on all of them. Generally 1 day in the bag will ripen them fully, but it depends on how ripe they were to begin with.