It relies on inotify (so you're stuffed on OSX and Windows) which makes it very fast and efficient (as opposed to periodic polling and file modification time comparisons).
At the moment it's actually quite generic for any command and any file but I'm hoping to take this to the next level with some magic dust that automatically only runs unit tests that fail or something. We'll see what happens.
Here's an example configuration that I'm currently using:
DIRECTORIES = ( ('search/unit_tests/test_views.py', './manage.py test --settings=test_settings search.ViewTestCase'), ('search/unit_tests', './manage.py test --settings=test_settings search'), ('search', './manage.py test --settings=test_settings search'), )