Apparently the waves of psychedelic oscillations and dreamy colors were created by Austin-based electronics designer and multimedia artist Larson and his Australian partner Leckie's new device called the LZX Visionary, "an analog video synthesizer that manipulates images in the same way an audio synthesizer does for sound." The result is layers of pastels and VHS-like distortion.LZX Visionary.
Larson shares new videos demonstrating pattern synthesis and colorized feedback, techniques used in the Neon Indian video, on his website, for those who wish to get even nerdier:
Larson describes his technique for the "37 Synthesized Patterns" video: "No external image was used in the creation of these clips -- with the exception of a couple, which use a feedback camera to introduce extra modulation. Modules used include the basic system of 8 modules, including three Video Waveform Generator signal sources. A variety of techniques are used including oscillator frequency and waveshape modulation, keying, voltage controlled mixing, signal summing and absolute mode summing. No post-processing or manipulation has been added."
A final example to convince you of Larson's brilliance, a reinterpretation of the final moments of Don Bluth's Secret of Nimh (1982):