How does MobileJoomla! identify that a phone device is viewing the website? I would like to understand how the system know that a phone device is accessing the website versus a browser. e.g. Let's say someone types in www.domainname.com directly into their phone. How does that then get directed to one of the subdomains associated with MobileJoomla and the customized phone landing pages?

According to HTTP protocol (RFC2616) each browser should send special "User-Agent" string that includes browser name, version, and some other data. MobileJoomla uses WURFL (huge database of mobile devices User-Agents) to determine device type and choose corresponding template.