Well, there's nothing in this video we haven't seen before, to be precise, two months ago at Microsoft's Techfest (click for my previous blog post). Even the same bubble oriented treasure hunt game was shown then. The technology itself is based purely on image recognition, using the same concepts behind Microsoft's Photosynth. Some more details (but not too many) can be found on the project's web page.
Via The Future Digital Life and Developement Memo for Ourselves.