When you first see the page, you'll see a photo in the center and many dusty dots around it. When you hover your mouse over the page, distorted squares will come up. Click on anyone of them and the whole scene moves and pans to view a photo at that location. The previous image will distort into perspective so that you can see the location of the new one. It's just a preview version and doesn't let you add your own photos (probably because it takes a lot of time to process the images), but there are a few collections for you to choose from.
Use the Fly Around button to see the whole scene. You'll realize that those dots are actually points of the 3d model constructed by the software. I hope they'll make them colored and more like solid objects in the future. Photosynth takes photographs and records the locations of different unique points on the picture (I guess by recognizing places with great contrast from its surrounding pixels?). Then it takes the whole collection of photos and stitches them together. I didn't know this technology could be remotely possible today...
I think this technology could be used in Google Earth, or, actually, more likely Live's 3D Virtual Earth. They could probably take only sections of the photos to skin the models. Just check out the Fly Around of the Grassi Lakes collection and you'll see how 3d they look.
EDIT: Wow, how could I forget to link. Here.
