How the iPhone 4's super-LCD works

Once he got his demo working, Steve Jobs dazzled the crowd Monday with one of the iPhone 4’s snazziest features: an ultra-high-resolution display that puts to shame any other cell phone on the market.

With a resolution of 960 x 640 pixels, the iPhone 4 crams more graphical ability into a 3.5-inch diagonal space than any other gizmo on earth (at least that anyone is aware of). With a density of 326 pixels per inch, Jobs claims it's better than the human eye can even detect at a standard viewing distance. In other words, if Jobs is correct, you’ll have to hold the phone right up to your face to see the iPhone 4's pixels at all.
Jobs called it the Retina display, but that’s not a technical term, just a snazzy marketing name for the screen.
What’s really behind the technology?
For starters, it’s a simple function of shrinking pixel size, something that engineers have been working on since the dawn of LCD technology. By shrinking pixels down smaller than ever, more can be packed onto a surface, and as long as the gadget has the video processing capability to support all those pixels, you’re going to get an awesome-looking experience.
But iPhone 4 has more than just raw pixels. Apple is also touting its optical lamination process, which basically adheres the glass directly on top of the LCD so there’s no gap between the two. As Displayblog explains, this "improves sharpness and clarity of the display by eliminating light refraction, which is caused by the small distance between the glass surface and the LCD that exists on pre-4 iPhones."
Finally there’s IPS, an acronym Jobs threw out but didn’t really explain. IPS stands for in-plane switching, and it’s an older technology dating to 1996 that was designed to allow for wider viewing angles on LCD devices. IPS was pricey, so it didn’t really catch on back in the day, but Apple brought IPS back with the iPad and is now extending it to the iPhone 4. It works by arranging the crystal structure within the LCD such that the crystals are parallel with the glass screen above. Traditional LCD screens have crystals at odd angles, which decreases brightness and makes viewing at odd angles difficult, but IPS corrects that problem by creating order from the chaos. You can dig deep into the technical details of IPS with PCTechGuide.