I discovered the Tilt Shift technique perusing the photography of Drew Wilson, an uber talented young photographer here in Sarasota. I asked him about the process and he was kind enough to share it with me.

Tilt shift photographs create an optical illusion that makes scenes appear as if they are actually miniature models (like your uncles train set). The outer edges are blurred which tricks the eye into perceiving everything in the unblurred parts as miniature. Its a fun post processing trick and its quite easy to reproduce.
UPDATE: Many of you have asked if there is a plug in or Tilt Shift software that will do this. The closest Ive found so far is: FocalPoint 2 You can try it out for free.
Here is my (and Drews) Photoshop tutorial for creating fake tilt shift photos.
- Taking the photo. An above ground shot is usually best for this type of technique. Cityscapes, crowds, streets, and similar things are perfect.
- Open the shot in Adobe Photoshop and click onto quick mask mode. 
- Select the gradient tool.
- Select the cylindrical gradient reflected gradient. 
- Draw vertically upwards from where you want the point of focus to be up the screen to the top of the window, and release the mouse button. A red transparent line should appear. 
- Go back into Standard Mask Mode. 
- In Photoshop CS2 or CS3 go to Filter > Blur > Lens Blur (Or if you have Photoshop 7.0 you can use Gaussian Blur). Then select the amount of blur youd like. You can experiment with the radius value a bit to see what amount of blur looks best.
- (Optional) For a more plastic feel you can increase the saturation and contrast in the photo.
There you have it you should have a nice fake tilt shift photo. You can experiment with lots of different photographs some are a lot better than others for miniaturization.
And when youre ready to step it up even more, you can incorporate HDR Photography and Tilt Shift together for amazingly stunning fake miniature scenes in high contrast. Using the above technique along with HDR software, such as top brand Photomatix (we have a 15% Off Coupon code), you can achieve results like this:

photo credit: Brandon Godfrey
Below are a few more examples of the tilt shift technique for producing realistic looking miniature scenes. Feel free to link to your own tilt shift photos in the comments. Happy shrinking!






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