Good question! my thought is that it works through the OH groups interfering with the reactions of the differnet phases with water in the same way that sulphonated superplasticizers interfere / compete with sulphate reaction to form ettringite.
It is not only sugar but I have seen no reaction at all with a 1:1 water/methanol mix.
Sugars have been known for their retardation effect for a long time. The common hypothesis is that retardation arises from adsorption on a hydration product (see the work of Thomas, N. L. and Birchall, J. D. (1983). Cem. Concr. Res. 13, 830). In addition, Taylor has an excellent review of the mechanisms of retardation by sugars in his "Cement chemistry" (pp. 346-349 in 2nd edition).