In this video, scroll to around 1:24. Andy McKee puts his right hand on 12th fret (Not sure) and pulls out his left hand from 3rd or 4th fret producing a peculiar sound. What is this technique called? And how exactly is it done? (I am not sure if this is a proper way to ask a question, but had no other way to explain)
If you hold your finger lightly over certain frets (barely making contact with the string), you get a harmonic note that is different than what the fretted note at that position would be.
What I see him doing at 1:24 is using his right hand to finger the harmonic at around the 12th fret and plucking (or pulling off) the string using his left hand. Sort of the opposite of what you normally see. He probably did this both for visual effect and so his left hand was in place for the next thing he wanted to do.
Yes, it looks like he is slapping natural harmonics on most (if not all) the strings at the 12th fret with his middle finger. You should also know that the particular chord that rings out from the slap comes from a very pretty alternate tuning Andy is using, so you won't get the same sound if you were to just try it on a guitar in Standard tuning. If someone knows exactly what tuning it is, I'd like to know as well.
I don't think there is a pull off involved, he's just quickly getting the chord voicing in his left hand out of the way in time for the open string harmonics to ring clearly when he slaps down.
You can use this technique not only for open strings natural harmonics, but with chords too.
Grab a chord for example A [00222x] and slap with right hand the 2nd, 3rd and 4th strings on 14th fret while holding your chord with your left. You can try other than 12 fret intervals like 5 and 7 frets.
Acoustic virtuosos are truly a special breed..