From Engadget comes this post:
LaserTouch is a prototype that recently emerged from Microsoft Research's labs, which essentially allows people to retrofit any display (monitor, projector, etc.) so that they can use their own hands to control the on-screen action. According to Andy Wilson, who played a vital role in the unit's creation, an infrared camera is used to track how a person touches the screen, while software that he developed handles the majority of the magic.
Uh... we've seen this before. From companies like Elo (with CarrolTouch), SMART Technologies and NextWindow. It's called IR touch sensing, and it's made the news a number of times. Not sure what "innovation" Microsoft is bringing to the party so many years after the tech has been on the market.
On the other hand, that does seem to fit with their operating history ;)