Nova Spivack, CEO of Radar Networks (creator of Twine) started, or at least fueled the hype when he wrote Wolfram Alpha is Coming -- And It Could be as Important as Google. He also did a writeup on Twine that details a demo Stephen gave him. Nova then wrote an article as a guest author on TechCrunch, which really started the hype. In the article Nova gives an overview of how it works:
Wolfram’s team manually entered, and in some cases automatically pulled in, masses of raw factual data about various fields of knowledge, plus models and algorithms for doing computations with the data. By building all of this in a modular fashion on top of the Mathematica engine, they have built a system that is able to actually do computations over vast data sets representing real-world knowledge. More importantly, it enables anyone to easily construct their own computations — simply by asking questions.I'm skeptical, but I look forward saying more after I am able to give it a try.