Music is "The Bells Play The Band" by Bell Orchestre. The space is Ground Zero gzbasement.net 20 minutes before a Friday night open mic.
It works like a long-exposure time-lapse camera that is more sensitive to things that are moving. Inter-frame motion is calculated and used for warping between frames, and the running average is weighted by a blurred difference frame.
To do this "properly", you'd need view registration and foreground/background separation etc., so only things in motion relative to the ground are blurred.