The EyeToy technology uses computer vision and Gesture recognition to process images taken by the EyeToy camera. This allows players to interact with games using motion, color detection and also sound, through its built-in microphone. The camera is manufactured by Logitech (known as "Logicool" in Japan), although newer EyeToys are manufactured by Namtai.
Source: Wikipedia, "EyeToy", available under the CC-BY-SA License.
While the EyeToy is simply a digital camera device for PlayStation 2, it has spawned about 20 games that require the EyeToy to function.