I suppose the practical purpose is you could dynamically change the key displayed. Have multiple layers? While your function key is pressed you can update the keys to what they are. All those quick keys for applications? Label what each key does instead of trying to remember all the combinations. Does an application not really need a keyboard? Cool, it's now whatever sort of input you want. Music software could show notes, a soundboard could have icons for each sound, etc etc.

Is all of that worth $350 for some first gen tech? Probably not, but I can totally see these catching on eventually.