MultiTouch Techniques

Optical-Based Techniques

Optical techniques use an infrared light source to illumuniate objects which are then converted to points of interaction.
The most common techniques are:

Frustrated Total Internal Reflection (FTIR)

Rear Diffused Illumination (Rear DI)

Laser Light Plane (LLP)

Diffused Surface Illumination (DSI)

LED Light Plane (LED-LP)

Front Diffused Illumination (Front DI)

Capacitive Techniques

Capacitive touchscreens are coated with a material that continuously conducts an electrical field and creates a capacitance. When the human body, which also has its own capacitance interupts this field, the location is processed as a touch point. This technique can only work with human touch and not with gloved figners or styluses. It can do multitouch though, as can be seen on the Apple iPhone.

Resistive Techniques

The most commonly used touchscreen technology used today. A resistive touch screen is made of multiple thin layers that when pressed are connected via an electrical circuit which are processed as a touch point. It does not though support multitouch capability and is mentioned here since it is often confused with capacitive technology.

There are many other touch screen technologies which you can read about here on Wikipedia.