I know that the below repeats things that others have said....
1) A KWH meter reports 2 things:
a) power: the speed that the disk turns is proportional to the power being delivered to the load
b) energy: by counting the turns of the wheel, the meter reports energy being used.
The relationship between power and energy is analogous to the relationship between speed and distance. The more power you use (the faster you go) the more energy you use (the greater the distance traveled).
2) You don't need to measure power factor if you are taking instantaneous measurements. Power factor is a tool that you have to use when you are dealing with voltage and current measurements that are averaged over time. If you measure RMS current, and you measure RMS voltage, and you want to figure out average power, then you need to know the power factor. But if you have a tool that somehow measures the moment to moment produce of voltage and current, and then averages that product over time, then this tool is reporting average power directly.
In a common spinning disk wattmeter, the torque applied to the spinning disk is proportional to the instantaneous voltage and current, so the torque is proportional to the instantaneous power. The disk is arranged with system that applies drag torque proportional to speed, so the disk will turn at the speed that makes the drag torque equal to the power measurement torque. (If the drag torque is less than the power measurement torque, then the disk accelerates; greater and the disk slows down. So the power torque equals the drag torque, and the drag is proportional to speed thus the speed is proportional to the power.) The disk acts like a flywheel, smoothing out small variations, net result is that the speed is proportional to the average power.
-Jon