It installs as an app which you can then launch and boot into Android. It takes about 10 seconds to boot, and based on what I see here I don't think it's running as an app inside webOS; it appears to replace webOS completely each time Android is loaded.
I would also say that this is a port of Android v2.3 Gingerbread, but the developer lists the OS version as 220.127.116.11.9. He clearly has a sense of humor.
A couple people over on PreCentral have already tried it and reported that it is legit. They also reported that it was buggy as all get out. This is the very first release of the app and it is quite raw. Almost nothing works, not sound, camera, multi-touch, and Youtube crashes the browser, too. It's also unstable and doesn't offer any easy way to reboot and go back to webOS.
I'm not sure at this point whether this developer will release a finished app before the Cyanogen Mod team, but there's a distinct possibility. He's already releasing a test install for everyone to try, and that's a major step ahead of his competition.