Isn't it fabulous? And I was lucky enough to receive this as my Christmas present this year. You knit with a "ribbon" or "mesh" yarn, only 8-10 stiches, big needles, garter stitch all the way. There's a simple tutorial for this kind of yarn here:
Although I am not a knitter, I decided I would like to try my hand at this as it seemed fairly easy and so we made a couple more scarves for Christmas presents - they are really quick to make, literally a few nights whilst watching TV (photos are a bit naf, sorry, but you get the idea!!)
This yarn had integrated pompoms (!) and was called "Rocio" from Katia.
There are lots of different ribbon or mesh yarns around, but you'll find instructions on the yarn label or, of course, from your local wool shop! Get those needles out!