The translation part is not that complex, you're basically just introducing an extra coordinate 'w' which is always 1, so you can write x -> x + w, which is linear, rather than x -> x + 1, which is not.
Things start to get weird when you note that this works even when w isn't 1. If you then decide that e.g. (x,y,w) and (x/w, y/w, 1) should be the same point, you can do some rather interesting things. Although, if you identify (x:y:w) with all the points on the line (lx:ly:lw) (for any l) then suddenly (x/w, y/w, 1) is just the point where this intersects the plane w=1, which isn't too hard to visualize. And if you think about it this also kind of explains why this coordinate system can be used to project a 3D scene onto a 2D surface with correct perspective.