How’s it work? When a digital photo is taken, the camera includes a bunch of info about the picture in what is known as Exif data, which is actually a part of the image file. Exif data includes the camera make and model and the date and time the photo was taken.
As for Flickr making use of that info that it’s had all along, I think this is a neat application. Some folks have called Flickr Cameras a cheap way for Yahoo! (who owns Flickr) to sell cameras. I disagree. It’s a highly useful service and if Yahoo! is there to give me the info and offer me a link to a store, then I’ll shop there first.