The contraption uses three microphones on the interior of the car to detect engine noise. Based on the frequencies they detect, one speaker in each of the front doors and a woofer on the rear shelf create antiphase signals to cancel out the noise. The canceling is set up to occur at passenger head level, and does not interfere with the music system or your own talking.
The Crown Hybrid, released this year in Japan, uses a slightly modified version of the hybrid system from the Lexus GS. Active Noise Control reduces cabin noise from the engine by about five to eight dB, and is permanently on. It's probably not out of the question that the Active Noise Control will make the jump to other Toyota products, and perhaps even Lexus models once they figure out how to put solid gold connectors on it.