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While there is no exact definition for what makes a display technology e-paper, it essentially entails paper-like readability in ambient light and very low power draw. The Pebble makes use of a new Sharp Memory LCD that puts it in the realm of e-ink and e-paper.
The display is capable of maintaining its current image with very low power draw (less than 15 μW for a static image, according to the manufacturer).
Peeling up the Pebble's e-paper display film reveals backlight LEDs. The small display only requires three LEDs (controllable by a wrist gesture) to light its face.