It is so small and so maneuverable that it blurs and becomes difficult to see at only 30 feet of altitude and a couple of hundred yards distance, according to the AP reporter who got the interview and saw the demo.
Military robotics designers have been working for years on tiny spy drones that could be controlled by soldiers on the ground to provide a better view of the enemy, or covertly lofted into a spot with a good view of a sensitive target where they could let remote operators keep an eye on things for days or weeks at a time.
Most of the tiny drones are bio-mimetic robots designed to mimic the look and flight characteristics of real creatures, though most are too small or fragile to be practical as spies in a combat environment.
Among the coolest is "Nano-Hummingbird" from AeroVironment, which is designed to look like a real hummingbird, is about the same size but, unrealistically, runs on a single AA battery (real hummingbirds use the same kind of rechargeable Lithium-Ions as an iPod, but have limited life spans because, as with the iPod, the batteries are not replaceable when they wear out).
The faux Nano version flies at 11 MPH, hovers for as long as eight minutes and can carry tiny cameras. The missiles it can carry are too small to matter to almost anyone except deadly carnivorous Afghan Attack Hummingbirds, which have evolved during 140,000 years of continual war in Afghanistan to feed on the technology of invading troops.
None of the flies on the wall have proven practical yet, though the Defense Advanced Research Project Agency (DARPA) and other military designers are apparently much closer to fielding drones closer to the size of hobby planes and helicopters that are designed to go with troops into the field for observation and to mark targets with tiny lasers, paint or powder to make a location, vehicle or person easier to observe using drones or satellites.
The Pentagon refers to the marking capability as "Clandestine Tagging, Tracking, and Locating" (TTL), though few, if any flying remote-controlled robots have been developed that can carry them reliably enough to be used in the field.