From what I can tell he is forcing in compressed air to turn the engine over shame he could not make the worlds smallest spark plugs and carb too, maybe a winter project!
A facinating piece of dedicated micro engineering, I agree it does seem to be a bit of smoke and mirrors as to how it is sustaining, it is possible we are just not shown the piston rings going in as clearly there are groves for them. I suspect it could be running as a diesel but you would have to guess the correct comression as with very small diesels you normally have an adjustable head to get the compression right.
Brilliant! No bang, so I'd agree with Matt, but no mean achievement nonetheless, however I lie prostrate before, and in total awe of the guy in Dan's link. Remember watching it at the time. Unbelievable skill and dedication and all done just for the pleasure of the journey and the satisfaction in the outcome.