You may notice he amplification part in the name, and that is the key here. What it does is turn a few bytes of data into a stream many times as large. In the case of the one discussed at Defcon, it took a 20 byte packet and turned it into 8.5K, with this ratio, you can take a cable modem and turn it into gigs a second of traffic. Toss a botnet into this, and you can crush the life out of any target you want.
The mechanism it works on is pretty simple. There is a DNS query of a type called 'any', and in the real world, it is pretty useless. If you send that query to an authoritative DNS server, it will return anything it has, which is everything. If you send it to a non-authoritative source, it simply returns what it has, usually little or nothing.
One other thing to note is that DNS as was originally specified has a 512 byte maximum message size. This was later extended so that if you needed more, it could do that. If your server didn't like the extended size, it would stop using UDP and set up a TCP connection, hugely expensive in computational terms, to send the data.
What the amp attacks do is hack an authoritative server and put in a large text field on a record, not large in the MS Word sense, but a few K of text. One person in the audience said he scans DNS servers, and on one he found large chunks of the book of revelations in a record. This probably is not RFC compliant, but the text with the four horsemen used as a DDOS is more than mildly ironic.
The next stage is a little more complex, you take a list of open DNS servers and query them for the record you hacked. They dutifully go out and look it up, download a few K of text, answer the query, and cache the answer. It isn't hard to find a few thousand of these, so you effectively have a botnet.
From that point, you take a real botnet, or at least a few machines, and spoof a few packets. Those spoofs are a simple DNS query for the record that you cached earlier, and the spoofed return address is the victim. Repeat on a massive scale, and the victim is flooded with huge DNS traffic.
With the overhead of TCP sucking up CPU time, and an amplification factor of tens to hundreds, you can take a few meg of traffic and turn it into gigs. The victim is flooded into the ground, and there is squat all they can do other than sit it out and wait. DNS amplification attacks are quite effective and fairly easy to pull off, just what we all need for a safe and happy internet. µ