It doesn't know. Hair cycles are constant. If you didn't cut it, it would eventually fall out as it is replaced by another hair. It grows to the point where the epithelial column contracts and starts forcing it out. This is based on environment, nutrition and genetics and varies from person to person and is affected by everything from stress to blood flow.

You can observe this on many people by looking at hair miniaturization of people who have MBP or similar -- the follicle constricts in size and the resulting hair that comes out is progressively shorter in length and diameter until the follicle is so constricted that it no longer produces hair.