David MacKay motivated the system with one of the best one-line descriptions I have ever heard:
Writing is navigating the library of all possible books.To see what he means, take a look at the demo of Dasher starting at 6:20 in the video. The system feels similar to driving through the text, pointing at the letters you want as you move to and through them.
The demos of navigating using eye tracking (24:52) and the much cheaper head tracking (27:42) are also worthwhile and clearly demonstrate the value of the approach for disabled users.
Despite the suggestion and demo (at 31:20) of Dasher on mobile devices, I suspect the tiny screens on cell phones would remain a problem. However, this kind of data entry interface might be usable and further motivate the trend to larger, all-device touchscreens on mobile devices instead of dedicated buttons and controls (e.g. the Apple iPhone).
The entire talk, not just the demos I linked to, is well worth watching, especially the motivation in the first 5-10 minutes. It really is quite clever.
The Dasher project page has more information, including a downloadable version of the application.