The combining of hydrogen and oxygen is what creates the electricity. The structure of a fuel cell is similar to that of a standard battery, only it does not breakdown - hydrogen just need to be supplied continuously. Hydrogen is introduced through the anode and oxygen through the cathode. A catalyst causes the hydrogen to split off into protons and electrons. The protons pass through the electrolyte while the electrons go around. This creates the current that can be translated into power. The end result is that the hydrogen particles combine with the oxygen at the cathode to form the waste product: water.
The FCX's uniqueness is that it is stacked in a vertical assemblage whereas most others are horizontal. Honda's belief is the this allows for a better flow of the water resulting in greater efficiencies.
It is still not certain as to the availability of hydrogen to consumers to support these cars. Nor is it widely known what the actual production run will be of the Honda FCX Clarity.
5 years is too soon for hydrogen fuel cells to be cost effective to average consumers. With the tremendous availability of hydrogen, it is only a matter of time (and lots of funding) until it will be an effective alternative to fossil fuels.
Source(s):
http://www.fuelcells.org/info/library/iaeinews.pdf
http://www.engineering.com/Default.aspx?tabid=3207&EntryID=85

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