When we think about moving, say, our pointer finger, our brain sends a signal through the spinal cord, which branches out into hundreds of nerves, which tells our pointer fingers to move. When an arm is cut off at the shoulder, those impulses are still sent through those nerves, but there is no longer a limb to move.
The old solution was typically just a hook on the end of a rigid prosthetic, and the wearer would just have to learn how to "make it work".
This new technology taps into those severed nerve-endings and translates them into a robotic arm's motion that is similar to the motion of a flesh arm. As a result, these veterans who have not had use of their arms for years (~40 years for Vietnam Vets) can finally use an arm and hand to brush their teeth, type on a computer, or do any of the other infinite activities the rest of us do every day... just by thinking about doing it.
Although this new robotic limb can be moved, the person using it cannot feel what they are touching; so it's difficult to discern how hard to grip something (think a lot of smashed eggs). DEKA came up with a cool solution: a vibrating cuff on the shoulder that vibrates harder the harder the hand is gripping something!
I am obsessed with this DEKA arm. To learn more, click here to see a video and read a summary of a CBS "60 Minutes" special about it.