It makes use of Arduino with a USB Host Shield, and the Android Open Accessory Protocol along with some software. One of the software used was to display the information being sent from the phone, and the other is an Android app that detects the presence of an external display and to send the the information to it. If you’re interested in creating something similar for your Nexus One device, you can head on down to follower’s page for more information regarding the process and materials necessary.
Granted this is probably a pretty cool idea and there are watches and other accessories that can do this already, but this is home made and we’re guessing it will be cheaper too. However due to its design, we don’t see many people willing to bring out an extra LCD on a breadboard any time soon.