There is a nice youtube videp the shows the concept very well: http://www.youtube.com/watch?v=RJaEg0xB98E
[1] Toshiki Sato, Haruko Mamiya, Hideki Koike, and Kentaro Fukuchi. 2009. PhotoelasticTouch: transparent rubbery tangible interface using an LCD and photoelasticity. In Proceedings of the 22nd annual ACM symposium on User interface software and technology (UIST '09). ACM, New York, NY, USA, 43-50. DOI=10.1145/1622176.1622185 http://doi.acm.org/10.1145/1622176.1622185
[2] One page abstract: http://www.vogue.is.uec.ac.jp/PET/photoelasticTouch1Page.pdf