It's an overlay network (a software defined network that runs on top of another network... like you internet service providers network).

It's closer to bittorent than a VPN. It has end-to-end encryption and each node (the app that runs on your PC) distributes routes to each other (similar to how routing works on the Internet between large networks). It appears to be a flat spanning-tree style network.

They mention that it is using similar code and ideas as the cjdns project.