In very similar fashion to PSJailbreak, JB2 is loaded onto a USB dongle which is plugged into the PS3. The software that lives on this dongle compromises the PS3 during its boot up sequence. Once the XMB finally appears after an extended boot period there are a number of options available to the user that currently only exist on developer machines.
Sounds a lot like the Pandora battery did on the Sony PlayStation Portable. If they find some way to get this running on all the available firmare versions, i think Sony's screwed.
They'll sell a lot of consoles though, so they better make some profit on that.