This video was taken with a IR modified Canon S3IS. The IR cut filter was removed and an IR filter applied to make mainly IR light visible at full intensity. With a normal digital camera (webcam, DSLR, mobile phone) it's possible to detect IR that's strong enough, e.g. a remote control, but this one is so weak you won't be able to record it. 10 seconds exposure on a normal camera might do the job.
When hitting the screen with an object the entire screen gets lit up, I suppose to compute where the center of the finger is.