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Basically it detects your finger positions on the back of a tablet-style device and overlays an image of them on the front. This means multi-touch is possible with no occlusion of the display. Even touch-typing with all fingers is now possible. Check out the video on the link.
They have to overcome the problem of using a camera on a boom to get an image of the fingers before this becomes a consumer device, but ideas for alternative sensors are in the works too.