Just to restate what was already said in previous comments: this technique should be called transversal vibrato. It is actually the standard technique on many fretted string instruments, in particular steelstring guitar.

On fretless instruments, the preferred longitudinal vibrato is just the obvious way to go: it periodically alters the sounding length of the string (that's what's not possible on fretted instruments) and therefore the pitch, but doesn't much change the sound in any other way.

Transversal vibrato, on the other hand, does a whole bunch of things combined:

1. It stretches the entire string, thereby changing its tension. This is what also affects the pitch. In fact, on fretted instruments, changing the tension is really the only way to modulate pitch; even the longitudinal vibrato that classical guitar uses actually modulates tension and not sounding length.
2. It rubs the string across the fretboard. Because that isn't perfectly smooth, this causes a little bit kind of a kind raspy sound. This is picked up by the string and can excite particularly higher harmonics. In fact it's a bit comparable to the action of the bow hair on the string – not really relevant on violin where you have a proper bow to sustain notes, but this phenomenon is quite desired by guitar players, particularly in blues music.
3. It alters the pressure down to the fretboard. This point is less relevant on fretted instruments because you have more space to build up plenty enough pressure to keep the string firmly on the surface all the time; but in fretless instruments it can easily happen that the string doesn't touch the fretboard anymore. This has a quite strong and hard to predict influence on the string's response – at sul tasto / low bow pressure or in pizzicato is mostly dampens the string, giving a more delicate sound with little resonance. At higher bow pressure, it tends to force the string into high-frequency modes. If you do this deliberately with sul ponticello bowing, you can achieve quite expressive screaching sounds.

I personally use transversal vibrato on cello mainly for one purpose: to add vibrato to natural flageolett notes. Like on fretted instruments, changing the free length is not possible in natural harmonics, but you can alter the tension. The resulting vibrato can actually sound quite sweet and æthereal.

Just to restate what was already said in previous comments: this technique should be called transversal vibrato. It is actually the standard technique on many fretted string instruments, in particular steelstring guitar.

On fretless instruments, the preferred longitudinal vibrato is just the obvious way to go: it periodically alters the sounding length of the string (not possible on fretted instruments) and therefore the pitch, but doesn't much change the sound in any other way.

Transversal vibrato, on the other hand, does a whole bunch of things combined:

1. It stretches the entire string, thereby changing its tension. This is what also affects the pitch. In fact, on fretted instruments, changing the tension is really the only way to modulate pitch. On classical guitar, longitudinal vibrato is the preferred technique, but here it actually works by changing the tension, not the free length.
2. It rubs the string across the fretboard. Because that isn't perfectly smooth, this causes a little bit kind of a kind raspy sound. This is picked up by the string and can excite it, particularly in higher harmonics. In fact it's a bit comparable to the action of the bow hair on the string – not really relevant on violin where you have a proper bow to sustain notes, but this phenomenon is quite desired by guitar players, particularly in blues music.
3. It alters the pressure down to the fretboard. This point is less relevant on fretted instruments because you have more space to build up enough pressure to keep the string firmly on the surface all the time; but in fretless instruments it can easily happen that the string doesn't touch the fretboard anymore. This has a quite strong and hard to predict influence on the string's response – at sul tasto / low bow pressure or in pizzicato is mostly dampens the string, giving a more delicate sound with little resonance. At higher bow pressure, it tends to force the string into high-frequency modes. If you do this deliberately with sul ponticello bowing, you can achieve quite expressive screaching sounds.

I personally use transversal vibrato on cello mainly for one purpose: to add vibrato to natural flageolett notes. Like on fretted instruments, changing the free length is not possible in natural harmonics, but you can alter the tension. The resulting vibrato can actually sound quite sweet and æthereal.