I don't see him accessing the NAND anywhere in the video. And if you mean the "built-in memory" menu entries on the video, it can be easily explained by the fact it's a quick and early port of GP2XMB which was originally created for the GP2X handheld and that menu entries must be a leftover from that system. I remember trying DinguXMB when it was out and nope, it had no NAND access.
On a side note, OpenDingux has now read support of the NAND partition, so yea, internal memory access from linux is now a reality.