This technique is described in detail in the Spring 2008 "Spin-Off" magazine. They also have videos of the process - Click to view their videos. This technique creates a novelty yarn spun on a core fiber (the core fiber does not show). The core is wound onto a hand spindle and serves up the core while you wind/ply a yarn onto it and feed it into the wheel. The trick with the handspindle is that you get it spinning in the opposite direction of the plying wheel, inherently creating a balanced novelty yarn.
*Visit Katie's blog, view the 15 May 2008 entry and see more details about how to do this plying technique.