bascially it allows you to tilt or shift the lens or both.
This allows for perspective correction via the lens, e.g. you look up at a tall building, with a normal lens the point of convergence / vanishing point is apparent, with a tilt shift it corrects this "distortion"
The tilt really affects the DoF, this is what's happening in the vid, where the focal plane has been shifted, DoF is greatly pronounced, this tricks the brain into thinking the subject is smaller, because the DoF is so extreme.
have a read through
http://en.wikipedia.org/wiki/Tilt-shift_photographyspecific tilt shift lens are very expensive as they are specialized, the cheap option for this lensbaby
http://www.lensbaby.com/index.phpor PS for miniature faking
http://www.tiltshiftphotography.net/photoshop-tutorial.php