If you study Neuro-Linguistic Programming, the Structure of Magic I & II, Milton Erickson, and Alfred Korzybski, it won't seem that magical.

Part of the trick is that during a routine operation - like a handshake - or asking for directions - you're brain drops down a level of awareness - you are basically on auto-pilot - but the illusionist interrupts the operation, you're still stuck in sub-optimal awareness pattern, and then you get manipulated in some fashion.

If you liked that one, this one cracks me up everytime, http://www.youtube.com/watch?v=UdlItEIj8bg