This post is just a speculation (aka guess work).
Google has a video chat function from within the Gmail web pages. This function is not available in the GTalk client yet. Google requires you to download a plugin which enables the video chat function form gmail. The video is rendered using Flash Player. In this article I present my understanding of how it works.
Flash Player exposes certain audio/video functions to the (SWF) application. But the Flash Player does not give access to the raw real-time audio/video data to the application. There are some ActionScript API classes and methods: the Camera class allows you to capture video from your camera, the Microphone class allows you to capture audio from your microphone, the NetConnection/NetStream classes allow you to stream the video from Flash Player to remote server and vice-versa, the Video class allows you to render video either captured by Camera or received on NetStream. Given these, to display the video in Flash Player the video must be either captured by Camera object or received from remote server on NetStream. Luckily, ActionScript allows you to choose which Camera to use for capture.
When the Google plugin is installed, it exposes itself as two Camera devices; actually virtual device drivers. These devices are called 'Google Camera Adaptor 0' and 'Google Camera Adaptor 1' which you can see in the Flash Player settings, when you right click on the video. One of the device is used to display local video and the other to display the remote participant video. The Google plugin also implements the full networking protocol and stack, which I think are based on the GTalk protocol. In particular, it implements XMPP with (P2P) Jingle extension, and UDP-based media transport for transporting real-time audio/video. The audio path is completely independent of the Flash Player. In the video path: the plugin captures video from the actual camera device installed on your PC, and sends it to the Flash Player via one of the virtual camera device driver. It also encodes and sends the video to the remote user. In the reverse direction, it receives video (over UDP) from the remote user, and gives it to the Flash Player via the second of the virtual camera device drivers. The SWF application running in the browser creates two Video objects, and attaches them to two Camera object, one each for the two virtual video device, instead of attaching it to your real camera device. This way, the SWF application can display both the local and remote video in the Flash application.
What this means is that for multi-party video calls, either (1) the plugin will have to expose as more video devices (is there any limit on devices?), or (2) somehow multiplex multiple videos in same video stream (which is CPU expensive), or (3) show only one active remote participant in the call (which gives bad user experience).
An open question to ask: will it be possible to use the Google's plugin to build our own Flash application and somehow use our own network application/protocol to implement video call? Hopefully Google will make the plugin API available to public some day.