This is called a Dynamic Shape Display. MIT built it, and it uses a Kinect sensor. In one of its applications, instead of a user in real life manipulating something on a TV, it puts the user on a TV, manipulating something in real life. See for yourself.
inFORM, the name of the display, has other uses, too—the latter portion of the video shows someone interacting with the display itself, for example, scrolling through a series of 3D representations of geometric formulae. One could see, potentially, how this might also become a type of game or game controller unto itself in the future.
The video shows how the device works at the end—the display itself is a grid of pins attached to actuators that are then manipulated by the computer to form the shapes seen on its surface. Whether that's the outline of a VW, or a hand picking up a flashlight, it all works the same.
The remote test here simulates a type of video conference, with the person on the screen remotely interacting with a ball where the conference is originating. You can imagine any number of other applications, too, particularly for scientists working with a hazardous object, or something in a hazardous environment.
There's more about inFORM, and those who built it at MIT, at the link.
inFORM [Tangible Media Group, Massachusetts Institute of Technology. Thanks Eric!]