This optical illusion relies on a principle called "Chromatic Adaptation"...
Have you ever entered a movie theater on a sunny afternoon? The room probably appeared completely dark but as your visual system adjusted to the reduced level of light you were able to see better after a few moments.
This "adaptation mechanism" allows our eyes to recover from an oversensitivity to a particular stimuli. "Chromatic adaptation" occurs when our eyes adjust to certain color stimuli. Chromatic adaptation is one of the more easily fooled aspects of vision, and is prone to some of the most spectacular optical illusions.
Over forty examples of the illusion, viewable as static images (with mouse rollover) or Flash video.