Basically, it uses an interior sensor / accelerometer to track how you moved the camera after locking in "true focus" (as Doug described). It then compensates for those movements at the moment of capture. So, you focus, get the beep / true-focus confirmation, release the TF button, recompose, shoot. It senses how you moved the camera / recomposed, and it compensates for the change in focal distance to the subject.
FYI it can't compensate for forward / backward or up / down movement of the camera. It compensates for angle changes, as if you are on a loose tripod head and the camera is stationary but swiveling around a single point.