Basically they make an utau or vocaloid using voice samples from the game.
Then they make them sing the song just like vocaloids.
Some are pretty damn convincing so I can understand why anyone would be fooled.
For fans this is a way for idols to sing the songs they wanna hear them sing. ^^ I've even seen original songs.
Actually, it's against the usage agreement to use official vocals without the permission of the singer, so using the game's voice samples and putting them into the UTAU program wouldn't be kosher. Instead, they directly take the samples, and manually pitch each syllable, no program acting as a middle-man. It's a bit more involved than Vocaloid or UTAU, which just has you input what you want them to sing, pitches and all, and you edit from there. (Which isn't to say that Vocaloid and UTAU aren't involved, it just isn't the same thing.)
