You've probably seen Microsoft's Photosynth tech, which creates mega-panoramas in 3D by compiling a ton of crowd-sourced photos and applying a little software voodoo. This new 3D-environment-from-2D photos project from Microsoft does kinda the same thing, but from your phone.
Basically, you shoot a bunch of photos - anywhere from a dozen to 40, with more photos adding more detail - and they're shot up to a Microsoft server, which blends them into a 3D environment on the fly. In this demo, a desktop computer sits for the server, and the photos are beamed to it instantly via an Eye-Fi SD card.
For a research project, the results are pretty stupendous, with everything in the video happening in the span of two minutes, and photos instantly viewable on the phone or desktop. The applications for this kind of instant-3D photo speak for themselves: ultra-detailed eBay listings, virtual shoe shopping, the most horrific sexting you've ever imagined. [Microsoft]