This practice is known as elimination communication. Some also refer to it as infant potty training, though elimination communication (EC) is more about watching your child's needs and reading their cues than actually potty training them. If you are wondering something like, WOW, do people actually, really, do this, the answer is, you bet!
The thought of elimination communication was strange to me when I first encountered it, after I had my second baby and decided to try cloth diapers. Little newborns don't know when they need to pee and poo, after all. Do they? That is not what people who practice EC believe.
They generally hold the view that infants are born with the ability to know when they need to eliminate (pee and poo) and that we teach them to ignore that feeling when we put them in diapers. Do a google blog search for the term elimination communication, and you'll read lots of moms' accounts of how great EC is and how wonderful they feel when they first "catch" a poo. Infants are generally held over a large bowl once they start giving cues that they are about to "go".
These cues can range from the baby making a "poop face", grunting, or moving his legs. Older babies are often taught to make a "pssssss" sound for peeing, for instance. If you still wonder whether something like elimination communication can actually work, I'll tell you that I've had the dubious "privilege" of seeing it in action.
I went to a mom and baby group where one mom practiced EC with her baby. When I met them, the baby was three months old and not wearing diapers. To give the mom credit, she knew exactly when her baby needed to go, and the baby didn't ask to pee or poo while they were driving in the car.
Pooing could take a long time, though up to half an hour. And once we were at the beach together, and the baby pooed on his mom! What are the benefits of EC, you might ask? According to those who practice it, a baby who can potty independently at a much younger age, no chemicals or wetness on its bum, no diaper rash, and... better bonding with the baby. Really.