Well, the idea behind it is pretty simple.

The basic principle behind it is that on every axis the texture gets "projected" onto the surface and the higher the angle is the less alpha it has.
(enable the line #define DebugProjections in the shader to see what I mean)

Here's a small, commented example ( source code included, of course )

EDIT: This technique is also often combined with multi-textures for each side (top, bottom, side):