It works a little like Tetris – you position a letter at the bottom, and a word falls into place around it. The objective is to get it as close as possible to a perfect kern. It’s not easy, unless you have a perfect eye and a very steady finger.
As you can imagine, the design is absolutely impeccable. It’s enormously geeky, too, but that’s not really going to put off hardcore typographers now, is it? Here’s a video of it in action:
Kern (via Technabob)