At the end of the article there's a link to a collection of Phidget Projects, where Phidget is a contraction of the words physical and widget. The first of those projects is Buddy Bugs. Now that immediately rang a bell. My hunch was right. It's a physical model of a leaf with bugs on it, where each bug represents a person on your buddy list (in this case using the MSN IM network). The bugs are translucent and their glow shows the presence of the person.
This is really exciting. Most of you know the Jabber World Map and maybe even the Jabber Fish Tank. What you might not know is that they have a common ancestor: the Jabber Christmas Tree. It's not online right now because, well, it's August. Anyway, this is a tree with lights, where each light represents a person. They all use some of the same concepts as the Buddy Bugs and maybe a physical version of the Jabber World Map or the Jabber Christmas Tree would make a good Phidget. Wow.