This is cool:
The Last Boss explains how it works:
Using topological depth technology, it figures out what's the static background, and differentiates it between the changing foreground. By pinching areas within the camera's view you section off ovals which you can use to rotate and move around the display, and the researcher said more gestures are being worked on. What you're looking at is basically an advanced, but limited, version of Eye Toy in disguise, but think about how many games you could use this technology with. Waving to other people on PlayStation Home, pointing soldiers around the battlefield, clicking on enemies in W.O.W., literally grabbing Pikmin on screen and throwing them around...
Hat Tip: Galley Slaves