Think of it as a two part thing
- Seadragon is a rendering engine for images, which is really fast and only needs as much memory as your screen resolution needs
- PhotoSynth is automatic linking of images to make 3D models
Go and watch the demo if you have no idea what I just said.
There's a live demo too.
The interaction with SeaDragon reminded me of Jef Raskin's zooming user interface (8mb swf)
I always wanted to build something like it, after playing with a photo+wireframing tool (It was like a poor man's google sketchup) when I was about 13. You'd get an image, draw a cube, and texture it, get another image, texture, hey presto, easy digital model. Unfortunately, adobe bought it and snuffed it, and I have no freakin' idea on how to build something like they have.
The performance of SeaDragon reminded me of a BeOS demo video - a lot of things going one at once.