Details are in this article: http://messymatters.com/tagtime
Short version: TagTime randomly samples you with a popup, asking what you're doing right at that moment. You never have to remember to do anything, so it's essentially passive. But you're not trusting the computer to infer what you're doing, so it's perfectly accurate (asymptotically -- you need a week or so of data for the inherent noisiness to average out, ie, to get a big enough sample size).