Check the first to pictures in this website:
http://infocenter.arm.com/help/index.jsp?topic=/com.arm.doc.dui0505c/BABBAIDA.html
Cubemapping is a way to cheaply produce reflections. The first picture shows one type of cubemap, you can easily see that it is 360 panoramic picture of a room and it also has up and down. In the second picture an object uses that cubemap as it's reflection source. So it doesn't really show a real time reflections of surroundings but simply an pre-recorded image of surrounding.
Cubemaps are organized in six squares that represent directions north, east, south, west, up and down.
One way to picture how it works is to imagine a box where the cubemap is projected on the inside of this box, each square to one side and following the directions. If you go perfectly in the center of this cube and look around, you will see 360 image of the surrounding world (depending on the cubemap image, it might be sky/earth, inside of a hall, anything really, in space it would be stars etc) . The way the cupemaps are formed has some special properties, mainly that if the image is processed correctly, you can't see that it is a cube.... Now lets put an object that has reflective surface in the center of the cube. When you look at that object, it reflects the inside of the cube back to viewer. So we get simplified and very cheap representation of the world.
Real time reflections are incredibly expensive to produce, the computer has to basically trace the image in the reflection from surrounding world, every pixel requires complex calculations.. Use Google images and search for pictures of cubemaps and their application, also look at raytracing even if it's not used but to compare the quality between two methods. The cost between the two in terms of processor load is like comparing a Lada to Ferrari. One is enough to get the job done, one is stunningly beautiful.
You see cubemap reflections when driving a car. You can see the working cubemaps on the buildings:
http://www.racedepartment.com/forum/threads/cicada-gp.29603/page-4#post-1098999
gMotor2 uses a horizontal strip format on it's cubemaps. So the panorama has to be shuffled a bit differently. I don't remember the exact order, but it was something like north, east, south, up, down, west (it was somehow illogical...)
Also anytime if any part of my answer is incorrect, please correct it. I have no education on this subject what so ever, all self taught so i must have gaps in my theory and wrong terms used..