It's done by the octoparts team IIRC. It's an external service they sell that HN gets for free. (Again; IIRC.)

EDIT: From the "news news" page: (http://ycombinator.com/newsnews.html)

We now finally have search for HN, thanks to Octopart, who've been working on it for a while as a test of their new search database, ThriftDB. You'll see a search box at the bottom of most pages.

Sorry this took so long. For a while we hoped to implement our own search, but it became apparent that would take a lot of work to do right. So we were delighted when Octopart decided to get into the search as a service business.