Yeah i saw this on engadget some of the comments where ridiculous! It is a sheet of eyeliner film which works like a 50:50 mirror check out this link to there page http://www.eyeliner3d.com/musion_eyeliner_mechanics.html it shows you how the system works. Very simple but very impresive.
Now to the speculation i personally think he has two infrared pens one in each hand and the camera tracking the infrared might well be a wiimote as it is the simplist way to track infrared blobs and get the info to do stuff
Check out Johnny Lees Page and download the Wiimote white board app it works really smoothly.