The concept is rather old, weird that no one of the VR manufacturers has thought about it before. It kind of works like having light-colored wallpaper and a light-source behind the TV. Phillips has something similar on their TV's called Ambilight, which isn't their to look cool but to function as stress re-leaf. Here is what Microsoft Research says about their project:
This actually makes a ton of sense. If it solves motion sickness for a lot of people, great. But it would also make the limited FOV less jarring.
Yeah it's called a monitor, not really new in fact they have been about in one form or another since the late 1930s.
There is a simple question to be answered: If you put and tunnel in front of your eyes, limiting your FOV to 60° (which is already surpassed by far), will you have motion sickness even without anything changing what you see? No, you will not. If you have 180° FOV LCD HMD, but there is 200ms delay between head movement and screen reaction, will that cause motion sickness? Sure, it will!!! What they are doing is creating illusion of more open space, preventing few people with claustrophobia to feel 'pressure'.
The only way to fix motion sickness is to use drugs. lol There's over 50 different drugs for it. http://www.drugs.com/condition/motion-sickness.html Best one seems to be meclizine.