It acts as an additional requirement to logging in to a computer, cellphone or network beyond a password.
Actually, it supplies the password. When you plug it into an USB port, it acts as a keyboard, and "types" a one-time password as soon as you touch its button.
One of the main security features of tokens of this nature is their inability to be tampered with since it is guaranteed to be connected to a computer.
Huh? How does being connected to a computer guarantee that it is tamper proof? Or is that the other way round?
The YubiKey Neo was potted in a plastic that melted totally in nail polish remover
The fact that the plastic can be removed so easily
Actually, methinks the issue here is poor word choice. Yubi should have touted their product as "tamper evident" rather than "tamper proof".
For its main application, tamper evident is enough. If some ill intentioned third party wanted to read the seed from the Yubikey's chip, they can, but it will be very obvious to the owner that this has been done (casing is gone), and so the owner can have his key blacklisted by his provider (making the seed worthless for the attacker).
Oh, an if you're worried about a "fast" attacker that uses the pilfered credentials immediately, rather than sleeping on them for a while: he can achieve this much easier by just stealing the yubikey, and using it normally, rather that bothering to dissolve its casing first.
along with a poor USB connector and keychain loop disprove YubiCo's claim that the YubiKey Neo is "virtually indestructible".
Good point on that one. Accidental destruction (causing hassle, but not a security issue) is indeed a real concern with the device.