It's easy to do that. Using an Octtree you simply divide the world into progressively smaller pieces until you reach the level of detail needed. This might be the size of a grain of sand for example. Think Minecraft taken to an extreme.
What do you render then? If the detail is small enough you may consider rendering blocks - the leaf nodes of the octtree. Other options include spheres or even geometric primitive. A color and normal can be stored at each node, and for reduced LOD one can store composite information at higher levels of the tree.
How can you manage so much data? If the tree is an actual data structure you can have multiple pointers reference the same sub-trees, much like reusing a texture but it includes geometry too. The trick is to get as much reuse as possible at all levels. For example, if you connect 4 octants in tetrahedral arrangement all to the same child node at all levels, you can make a very large 3d sierpinsky fractal using almost no memory. Real scene will be much larger of course.
The problem is that it will only work for static geometry because real animation would require manipulation of all that data every frame. Rendering however, especially with variable LOD is no problem.
How to render such a thing? I'm a big fan of ray tracing, and it handles that type of thing quite well with and without a GPU.
All of this is speculation of course. I have no specific information on the case you're talking about. And now for something related but different:
A huge amount of data rendered
EDIT And here is one that I did, but I deliberately altered the normals to make the boxes more apparent:
Stanford bunny in voxels
That frame rate was on a single core IIRC. Doubling the depth of the tree will generally cut the frame rate in half, while using multiple cores will scale nicely. Normally I keep primitives (triangles and such) in my octtree, but for grins I had decided to render the leaf nodes of the tree itself in this case. Better performance can be had if you optimize around a specific method of course.
Somewhere on ompf there is a car done with voxels that is really fantastic - except that it's static. Can't seem to find it now...