Tim Perdue (who built this site, originally <?>) wrote a good article about this some time ago that was very popular. Go to the main portion of the site and do a little looking around.
IIRC, it has to do with a "ForceType" redirect (enabled by a certain Apache module<?> or maybe it's just a native directive) that causes all http requests to be routed to a PHP script; the PHP script parses the query string (URL, actually, since it's slashes...) and turns the path entries into variables to determine content.
Interesting. A good search term might be "search-engine friendly."
HTH,