The researchers at the Fraunhofer Research Institution for Modular Solid State Technologies EMFT say that the the dye works by measuring pH values. Regular human skin and healed wounds have a pH value around 5 — if the pH value goes up to 6.5 or 8.5, then the dye will change color from clear to purple. When it changes to purple is when you should start panicking because you'll likely have an infection.
EMFT is currently working hard to find an industrial partner to mass produce its dye for commercial sale. Hopefully bandage makers are seeing the full potential this dye has to offer.
We can't tell you how many times this infection indicating dye would have come in handy when we were little tots. Think about how many fewer wrinkles we would have on our foreheads if we weren't stressing the fear of an infection.