One of the robots fakes human interaction by tracking fast motion and flesh colored pixels. Brooks marvels at how a few simple rules can produce a machine that is remarkably life-like. If you're not sure, they have video tapes of lab visitors holding conversations with the machine, who apparently takes part in the conversation with the patient interest of a well-bred host.
I listened to Brooks present the semi-academic version of his talk at Duke. The really fascinating thing about this robot/experiment is that making the robot react to simple cues from the human makes the robot act much more intelligent than it actually is. It may be easier to make a robot that behaves intelligently around humans than it is to make one that intelligently explores mars.
By giving the robot the ability to recognize eyes and where the human is looking, it can pick up cues as to what aspects of the environment are important. By making it maintain a proper conversational distance from the human, it prevents collisions and makes talking to it much more comfortable.
Because the robot responds to its environment, the environment shapes the robot's behavior. If that enviroment is alive and intelligent, the robot's behavior becomes more intelligent than it would normally be. We give off hundreds of little cues that allow us to respond intelligently to each other, and Brooks' work has opened the door to letting robots bootstrap themselves to a higher level of interaction.