they were demonstrating that their iPhone could be used to navigate instead of a Garmin. The iPhone had a GPS + mapping software + a video camera + augmented reality software. All that working together...

The iPhone was mounted where the Garmin would be mounted.
The camera phone displays an image of what is ahead of the car.
The GPS tells the camera where it is.
The map software can overlay a "route" on top of a 3D road map.
The augmented reality software hijacks it, subtracts the 3D road map, and bitblits the "route" graphic over top of the image of what is ahead of the car.
The result is a real-time video of the road ahead, with an artificial yellow route line painted on it that tells you where to turn, which direction to follow.

It's not bad actually. And you don't have to buy a Garmin in addition to a cellphone.