The process is relatively simple. Audi places a template on the car with the desired design - like the Audi Sport logo in the image above - and then uses a special powder to basically sandblast the paint, roughening the surface of the clear coat. The result is a matt area with a depth of just a few thousandths of a millimeter, less than the width of a human hair, that's basically a permanent decal. Audi can currently handle images up to one meter square and will accept nearly any image that doesn't violate third-party copyrights, presumably excluding any obscene image as well. Just wait for someone to test the limits on that one.
The cool thing about the process is that it can be applied at pretty much any point in the car's life. This means any vehicle is a candidate for customization and that an owner could purchase the car at a dealership and have the custom graphic applied afterward. Because the powder affects the paint surface, the image is more resilient than a wrap or sticker. The new option is limited to the side blades on the R8, but Audi will be extending it to other models in the future through its Exclusive program. And while it might affect the resale value of the car, it's a heck of a lot less painful than a tattoo.