My guess is that the iOS SDK has been expanded to allow for a second screen that is output over lightning. So no, it's not mirroring the phone screen, but displaying another screen powered by the phone. This would seem to fit with it being iPhone5 and above only as lightning is designed to have these sorts of custom digital output.
Correct. At a minimum, it's a secondary display. But it's also deep integration into both ends over the Lightning cable (hence the iPhone 5 requirement).
