It's not as complicated as it sounds, actually. The program just matches your face to one of 60 models in its database, then uses the data from professional makeovers done on those models to give you advice. So basically, you're getting makeup advice for someone the computer thinks looks a whole lot like you.
Still, given how many products there are out there, and how much time many of us spend trying to find makeup shades that look good, the software could be worthwhile. Until it becomes commercially available, though, you can always just head to Sephora and ask one of its beauty advisers to help you pick out colors.