How'd they do that?

Pretty clever trick isn't it? The magic is really in the Dashboard widgets. Apple has this framework called WebKit. WebKit is the fully HTML engine sitting behind Safari web browser, Dashboard Widgets, or any Mac OS X application the chooses to include a WebKit view.

The WebClip Dashboard widget is basically a WebKit view with a designated visible rectangle. The rocket science is in WebKit and not necessarily in the Dashboard widget itself.