How it works under the hood? No specific idea. I wonder if its sound.
Again, it is a random token the card generates internally for each service. It is non transferable! If you get a new ID card, you can't use it login to whatever you used your old card for. (You would need something else... say an email :-) to tie the knot back to the old identity or whatever.) Which makes this function, the pseudonym function, very bad for random accounts (Edit: meaning longer lasting online identities like forums or whatever). I guess eaglemfo didn't knew.
It's more for like "yes, yes, I'm an adult, now give me this pr0n movie which I pay for with my anonym prepaid card" kind of deals.
A centralized authentication system like this wouldn't need to be a single consistent UUID per person which was then passed around. Presumably you'd have a central login to authenticate you to the system, and then the system could create separate 'id' tokens per web site or whatever that the user logs in to.
Oh man, that sounds like a terrible idea privacy wise. Every website would make use of it to track it's user.