On each littleBoard there's an op-amp chip that has "signal" as it's input. The op-amp then provides power to an output device. This separation of input signal from output power allows for the signal voltage level to remain unmolested by whatever might happen on the output side of the circuit.
What does not happenThere are two other ways they could have gone with the design; two wires, or fully digital.
In a two wire system you start off with one Ground wire and one power line(+5volts max) coming out of the power board, and the input boards simply control the level on the power line between 0volts and 5 volts. The most common input board would be a simple on/off switch.
When the the switch is closed (on) the power line gets the full 5 volts. When it's open (off) the "power" wire gets no volts. Thus the output device either gets power or it doesn't. This is roughly how your standard light switch works; power, or no power.
In a fully digital system you'd run three wires; ground, +5 volts and signal. The signal wire would have serial data running along it to communicate between microprocessors on every board.
This setup has the full benefit of having the potential for all the bits to be programmed to do amazing things. The downside is it's inherently complex from from my 4 year olds perpective. It can be made to look simple to users, but - under the hood - it's not.
Which way should I go?Initially I thought I'd slap together some simplified version of littleBits, then evolve to follow their three wire setup with op-amps on every board. But, now I'm toying with the idea of devolving to the simpler two wire setup. Or maybe stay with my initial hybrid three wire but no op-amp approach.
There seems to be plently of scope for building things with either way.