In a nutshell, every time a user changes their friends list or their feed changes (or a number of other fields), an event is generated and transmitted via HTTP POST to a designated URL, where the change can be acted upon.
To facilitate this communication, you have to be subscribed to the changes, as explained in the API guide. I was playing around with the API last couple of days, so the first thing I wrote was a simple subscription manager in PHP.
Here are some examples:
Subscribe to 'feed':
php facebook_realtime_register.php -i [app_id] -s [app_secret] -c http://myapp.com/callback/ -t [verify_token] -a post -f feed
List active subscriptions:
php facebook_realtime_register.php -i [app_id] -s [app_secret] -a get
As it is now, I think the API is lacking. The biggest problem in my opinion is that the actual notification does not contain an ID - so if my friends list changes I cannot be notified with ID's which changed, or if my feed changes I cannot easily get the ID's of new posts.
The other limitation are the actual fields which you can subscribe to - currently, the interesting fields like 'posts', 'photos', 'videos', etc cannot be subscribed to.
Promising, but boring for now!