This is a High Dynamic Range (HDR) image, created with Photomatix. HDR's are composite images that utilise several different exposures of the same scene (in this case, six exposures at f/5.6, between 1/15th and 1/500th) to create an HDR image to which you then apply a tone curve. I'm not sure I understand quite how it all works, but basically the software works to create areas of local contrast within a scene rather than applying a uniform contrast across the image.
If you're interesed in reading up about this follow some of the links from the HDR flickr pool. I intend to shoot a lot more of these so will put up more information as and when I get my head around how it works. For the time being though, I do like the result.
As for this attempt: technically, it could be better, especially since the original images are slightly out of alignment with one another (tripod on sand, windy, and so on), but I just love the surreal effect. I wish it didn't take quite so long to postprocess though – this one took around three hours from start to finish ;-)