What it is
To get directly to the point, NBOR let's you create new tools that can be assosiated with specific actions and then apply these actions to other objects. Everything in the Blackspace is an object. Even the "Font Selection" dialog is an object and its various parts can be dragged around and modified, for example you can drag out of the dialog the font list and resize its own window container. Other objects involve pictures, audio, widgets, even context menus: they can all be modified in real time and be removed/added new objects/actions in them or change the way they look or behave. Absolutely everything is configurable.
The main idea behind Blackspace is the ability to create your own tools. For example if you just draw with your mouse a simple line with a circular line in the middle the program figures out that this is a slider and so morphs your drawing into a slider for you (with all derived functionality a slider should have). Then you type some text (e.g. "weight on Mars") and you drag that text on the slider. Immediately the slider becomes attached to that text and it modifies the value everytime you move the slider. Now, if you create a new slider and text (e.g. "weight on Moon") and attach them together and then type "pie chart" and use the Arrow Line (there are different colors of Arrow Lines that each does a different job), BlackSpace will create a pie chart automatically and each time you change the slider the pie chart also changes its presentation real-time.
Another example is making a small animation or slide show by using such "user created tools". With these tools you can assign actions to objects: you can derive advanced text processing layouts, changing the hue or rotate an image, put objects inside other objects so they only become active or visible when you click them, create small movies of what you are drawing in real-time etc etc.
Overall, Blackspace takes this approach: Instead of having the programmer hard-code a bunch of menus and functionality where the user might user or might never use, the user creates the functionality from scratch. Example: In the current applications you click "Bookmarks/Add bookmark" from a browser menu. This is a pre-defined functionality. You can't alter it and you can't delete it, you can just choose it if you want it. On Blackspace you start from scratch: The user creates the functionality (via visual drag'n'drop ways - no code is involved) and decides how it will look like and how it will behave. Sounds great, right? Well, it's a double edged sword.
The problem with this approach is that while gives freedom to the user, it also creates interesting problems: the user will need to know how to do it (with a visual way even) as it is not apparent how you can "program" everything you might wish. Another problem is that the user can't do everything he/she might want. There are basic functions where the user can pick and choose and put them together to create a new action (think object oriented), however how do I create new *basic* functions? For example, there is the built-in ability to alter the hue, rotation and size of a picture or movie. But how do I change the contrast or make my picture greyscale or colorize it? These are basic functions that do not derive from any of the available built-in ones. So, either third party developers would need to provide me with these new basic functions, or I would need to sit down and literally program them in C++ (the Blackspace application is written in Qt btw), but then again, we don't even know if NBOR will offer an SDK.
You can think of Blackspace's ability to create brand new or altered functionality as MS Office's VBA or Gimp's scripting, only that Blackspace uses completely visual ways of programming your objects and it doesn't have enough built-in basic functionality to derive from.
On top of all this, it is the interface itself too. It is extremely unintuitive to work with Blackspace. It feels like a bunch of programmers sat down and wrote it without any input from a "real life person" or a usability designer. To assign actions you get these one or two letter buttons (e.g. "PR" -- what does that mean?), the context menus are a mess while the color palette (which is actually an action palette -- each color does a different thing) is also confusing.
To view the demos yourself, download the player, run it, click "Helps" and in the new window that will load click "Presentations" and then the first .uip document showing there. The document will have buttons that lead to many recorded demos.
My opinion is that NBOR's Blackspace could be a great university/phD project or a research project. But not a product. It is currently very limited (few basic functions to derive from) to be used in real offices (for $299 retail price no less), it does not interoperate with existing office documents, its interface is terrible and can even be time consuming creating some of the tools from scratch for functions that they are just a click away on existing Office or graphics applications.
I wish the best at the NBOR folks, I like people who try to think out of the box. However the end result is nothing usable from today's professionals who want to get their job done. Maybe when they have a complete SDK to give away, they refine their interface, clean up the crashing bugs of the player, be more compatible with office and other popular documents and more integrated into the operating system itself, then maybe NBOR would have a chance. But if that take them 10 more years to complete I don't want to even imagine their investor's mood by then.
* Here is an article I wrote more than a year ago which described a next-gen OS with many similar concepts to NBOR's Blackspace.
* Object Desktop also has some similar concepts albeit not as far reached.