This device looks like it can do exactly what they claim.

I have a similar sized 512MB USB flash memory dongle that can be used to boot a PC (most modern PCs will boot from a USB device & many basic OSes will fit in 512MB).

The latest USB memory dongles can offer 1GB ram & the 2 & 4 GB is not far off (if not already available, but expensive). This is a lot of transistors & logic in 1GB memory..

The device in the article only has a 'tiny' amount ram & flash ram.

Cheers - Doug