Browsers today (even with HTML5) are mainly consumers of media. There's great ways to get audio and video to a browser, but no capabilities for getting access to a user's microphone and camera and no way of sending media from a browser to elsewhere. WebRTC fixes that.
A phone call has two halves, there's the signaling (where does this call go to, is it still active, did the other party hang up, etc) and the audio (the "media" in telecom parlance). What Phono is doing in this demo is connecting the media and the signaling from an early WebRTC implementation to the public phone network. Using the audio capture from the browser and letting you make and receive real phone calls with it.
The other stuff is impressive.
Phono uses XMPP for this (IIRC), which opens the window for really cool integration with existing endpoints.
Interesting - I hope it'll land in a FF beta for me.