It links to the article “Kate Middleton jelly bean expected to fetch £500”. Why does it work?
Because the article that is displayed only depends on the numeric ID at the end of the file name of the URL. Anything else can be changed at will, for example:
The Independent explains why they handle URLs this way:
While many could see it as a hack leaving you open to practical jokes –
it can have positive features too: Jack Riley of the Independent explained why it was useful on Twitter –
“In case a user misspells a headline, or we change the headline as a story develops” 
This is indeed a good idea. The ID is included for unique identification, the rest can be changed so that the URL means something to humans, too. Amazon handles its product URLs similarly.
Update 2011-04-24: The Independent has reacted to this prank:
If one uses one of the fake URLs, one is forwarded to the correct URL of the article.
A note has been added to the article: “A faked url for this story has been circulated widely. Please read an explanation and our apology here.”