This was one of the coolest half hours of TV I've seen in a long, long time.
The computer, Watson, is not connected to the internet.
He gets the clues via text document sent to him. To see a minor explanation of how he deciphers the words, and figures out WHAT is being asked for, was pretty incredible. If you can HULU tonight's episode, or if you're on the west coast and it hasn't come on yet, I'd highly recommend it.
One part shows the "progression" of Watson, in a practice session where a clue was asking for a "non dairy creamer" and watson said "Milk" Then they showed how he could take a question similar and really "figure out" what the clue was getting at.
Cool, and terrifying all at once.