It is built using an off-the-shelf programmable hardware device called a GODIL that can be purchased for just over $50. The device plugs into your CPU socket, replacing the CPU, and you can control it over a serial connection to debug your software or hardware.
You unplug the 6502 processor (which is in a 40 pin DIP socket) and plug in the GODIL loaded with ICE-T65 design. ICE-T65 contains a fully functional 6502 processor, plus a second arduino compatible processor running an interactive debugger application via an independent serial port.
Now you have a set of powerful debugging tools at your disposal:
You can run memory tests on the host RAM
You can compute CRCs over the hosts ROM (and compare these with values from known good ROMs)
You can peek or poke host I/O devices, or host memory, or even the screen
You can set break points on certain pieces of code being executed, or certain memory locations being accessed
You can disassemble bits of the host memory, do memory dumps, etc.
You can reset the 6502 processor and single step through the operating system as it initialize
You can even inspect the 6502 processor registers while it is stopped