Here's what eco-mode do in Honda City. It changes the throttle position sensor setting. Let's say you press 10% accelerator pedal with your foot and throttle body opens around 16% in normal mode. In eco-mode, the throttle body will open 14% for the same accelerator pedal position.
So in eco mode, less air will come in the engine and hence less fuel is sprayed by the injectors. You could obviously feel slight decrease in engine performance.