The code is set to randomly choose two RGB Colours (256 values per colour channel) and then slowly morph from the last set of colours to the new set with a 10 seconds delay inbetween the transitions.
Version 2 of this will include a TLC5940 chip to enable a much smoother transition. The PWM on the AVR gives you 256 greyscale steps whereas the TLC5940 gives you 4096 giving a far smoother control. You also get the ability to control 5 seperate RGB LED's from one chip compared to 2 directly from the Arduino using PWM (although there are ways to simulate PWM on other Digital I/O lines in software).
I love the way the lights give a misty effect to the rear buildings making them look like they are floating in a sea of coloured mist. The video doesn't do it justice. The lamp looks far nicer in real life.
The skyline is based on Liverpool. These lamps are available for sale, with a skyline of your own choosing, upon request.