A look inside the Sony Playstation Move shows that in addition to the internal electronics, the sphere at the end of the PlayStation Move handheld motion controller allows the PlayStation Eye Camera to pinpoint every movement and position within the room. Here's a link to the full-sized PDF: Playstation Move
From www.gamestop.com: PlayStation Move redefines motion gaming with the most immersive and realistic gaming experience only possible on the PlayStation3 system. The simple, easy-to-use controller captures a full range of motion giving you ultimate control over how you play the game. With a diverse selection of games and new ones launching all the time, you can enjoy hours of fun with friends and family.