Update: a much more thorough explanation of this project is available from Make Magazine. It might be easier to follow their instructions, and I think their code is more up to date.
The basic goal here was to make a 3D hand-position sensing system that most people can build, while still preserving some semblance of functionality. To get an idea of possible applications, check out the demo video. If you think you can build one that is simpler and equally accurate, or slightly more complex and more accurate, share in the comments!
DIY 3D Interface: Tic Tac Toe from Kyle McDonald on Vimeo.