Well, you could think of it as a hybrid between LCD and DLP. LCD uses liquid crystals, one for each pixel, on glass panels. Light passes through these LCD panels on the way to the lens and is modulated by the liquid crystals as it passes. Thus it is a "transmissive" technology. On the other hand, DLP uses tiny mirrors, one for each pixel, to reflect light. DLP modulates the image by tilting the mirrors either into or away from the lens path. It is therefore a "reflective" technology.
LCOS combines these two ideas. It is a reflective technology that uses liquid crystals instead of individual mirrors. In LCOS, liquid crystals are applied to a reflective mirror substrate. As the liquid crystals open and close, the light is either reflected from the mirror below, or blocked. This modulates the light and creates the image.
LCOS-based projectors typically use three LCOS chips, one each to modulate light in the red, green, and blue channels. In this it is similar to an LCD projector which uses three LCD panels. Both LCOS and LCD projectors deliver the red, green, and blue components of the light to the screen simultaneously. There is no spinning color wheel used in these projectors as there is in single-chip DLP projectors.
LCOS technology is usually very high resolution, and typically higher in price than most LCD and DLP products. There is no such thing as an SVGA resolution LCOS projector, and we know of only one very rare XGA resolution machine. Generally LCOS machines begin to appear in the SXGA (1365x1024) resolution class and higher. So by definition they are not cheap.
Nor are LCOS projectors particularly compact as compared to portable LCD and DLP units. The lightest LCOS machines to date weigh about 12 lbs. But they can get much larger and heavier than that.
So due to inherent high resolution and larger form factors, LCOS technology has not yet been adapted for cheaper mass-market portable projectors. Todays' LCD and DLP projectors sell in much higher unit volumes and are more appropriate for mobile presentation, classroom, and inexpensive home theater. For this reason LCD and DLP technologies get a lot more attention. Since LCOS does not sell in the volumes that LCD and DLP do, many assume it is not as good as LCD or DLP. Nothing could be more wrong. Many well-informed videophiles seeking the most elegant home theater solutions opt for products using LCOS technology because of its unique blend of performance characteristics that neither LCD nor DLP offer. (referenc: EPSON.COM)
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