It's a bunch of neurons that speak to a computer with a microelectrode array. So they "speak to" the neurons with electric impulses, and then "listen to" what they have to say. The computer it's connected to uses binary, but the neurons are somewhere in between. Yes, the change in electrical potential is analog, but neurons are typically in their "on" state, recovering from their "on" state, or just chilling out.

The brain is incredible because of the network of connections between neurons that store information. It'll be interesting to see if a small scale system like this can be used for anything larger scale.