It’s a big room fitted with sensors. The user wears a head-mounted display which projects a virtual reality image. Sensors in the room tracks the user’s location in 3D space, while showing the user a realtime image of a virtual-reality landscape that the user can move through.
The simulation uses a kind of trompe-l’œil trick to make the space seem larger than the room itself. (You might say the holodeck is bigger on the inside, if you want to mix your Star Trek with Doctor Who.) The simulation might show a street with a very slight curve in it, imperceptible to the user, who thinks he’s walking in a very long straight line.
Via New World Notes — thanks, James!