As far as I know, it works via some cunning peering arrangement with LINX. So rather than everyone piling onto their general internet connections to the Beeb and approaching it from all sides, the Beeb set up dedicated routers between their dedicated broadband content servers and LINX, and then ISPs subscribe and get a route to the LINX end of the arrangement, thus giving their users a much more direct line into the BBC than they would have by just going over the wibbly wobbly web.
The end result being that we get access to the Beeb's stuff faster and with less network congestion. Last I heard, Plus were in the final stages of buying into it, so we should be able to get our 24/7 dose of death, war, famine and plague in lovely streaming media soon :-)
Of course I could well have got all that totally wrong, after all it is long after wine-opening time on a Saturday night.