This is truly one of the most amazingly, mind-bottling things I have ever seen! http://www.youtube.com/watch?v=Axi58IkRkvk&feature=related Extra "Wow!" moments at 0:53 and 1:50.
Well, I don't want to spoil it for anyone who just wants to be mystified, but... Spoiler At 0:58, you can see her purple dress drop down. Doesn't really explain how they did it, though.
Well, the most logical explanation is that it is all one dress. Keep in mind there is no such thing as illusion, only tricks. At :53, if you look at the bottom of the hoop you can see the dress drop down. That suggests that the dress was originally longer, and she just pulled a chord that untied what kept it up perhaps? You also notice that the clothes are the same/similar except for their color. Hence, I believe that they were just changing the colors of the dresses, not the dress entirely. It could have been reactions or something, I am not sure, but it was done in some way along those lines.
While that is a logical answer, if you look at the change at 0:35, the dress she changes into has a higher neck than the one before. I'm trying to picture it, and I don't see how a drop down dress could do that.
How the hell? Maybe it's like the Prestige's teleporter trick. They're all different people and the one before her falls through the stage into a tank of water and drowns!