I'm trying to figure out how they are doing this, but the code is so complex and convaluted that I can't figure it out. (not that I'm a genuis when it comes to this stuff anyway)

http://spell.jacuba.com/ "free" spell checking for text areas. Somehow highlights questionable words in the text area as you type.

How on earth do they highlight the words in a standard textarea?

It looks like they are building a layer over it, but I don't understand how they figure out the correct position of the word from the textarea to the cover layer.