From their blog entry: "Sway’s built-in design engine takes the hassle out of formatting your content by putting all of it into a cohesive layout as you create. ... This is thanks to a lot of Microsoft Research technology we’ve brought together in the background. As you add more of your content, Sway continues to analyze and arrange it based on the algorithms and design styles we’ve incorporated."

It sounds like they're doing some more complication computation on the fly than typical responsive CSS. I suspect that it's related to some of the "Reading mode" work that they've done with IE.