It’s called Elf on the Shelf.
I think it’s been around a few years, it seems to be really gaining momentum with parents this season.
My understanding is the Elf watches the children to see if they’ve been naughty or nice. Every night he returns to the North Pole. And every morning he re-appears at a different location in the child’s house.
This last bit is what I think is so clever. By a simple act of moving the Elf, he is then rendered interactive.
Not in the wii or Nintendo DS Way, but in a much simpler and perhaps more powerful way through a combination of parental love and effort and childhood imagination.