http://www.youtube.com/watch?v=mg-Jo-mg3BM&feature=related

Can someone explain why this would work?

Looks like methanol removal (into the air), not recovery. Can't really tell without some labels.

Well, ASSUMING this is not just another youtube fake video (which is already a pretty big assumption), one possible explanation would be that this is just a condenser that instead of using water for cooling, uses a refrigeration unit. Judging for the small size and absence of a (visible) fridge unit, I'd say maybe a Peltier type system.

I agree with Andrew - most of the methanol is boiling off. It also looks like the tube is insulated rather than cooled! It also appears that the methanol in the bucket is contaminated with glycerol - glycerol foams and travels up the condensor tubes when the methanol starts to boil. I would guess that the small amount of methanol that is actually seen dripping out has condensed in the neck.