This demo uses a technique that's similar to standard lightmapping, except that this is done in three dimensions. Every point in the room has a light visibility precomputed and stored in a volumetric lightmap. This way you only need a simple texture lookup to determine the amount of light that hits the object. The advantage of this technique is that it's cheap and you get soft shadows for free. The disadvantage is of course that lights must be static. The advantage of the 3D version however is that it unlike 2D lightmaps is also useful for characters and dynamic objects.
The demo should run on Radeon 9500 and up and GFFX. You may have to do a registry tweak to enable GLSL on the GFFX at the moment.