They did some very clever math, such as correcting temperature to reflect that the phone is likely to be in your pocket and thus affected by your body heat. The validation is quite strong...in other words, this method works. It does have some interesting challenges (are you indoors, outdoors, or in your car?), but as with other crowdsourced projects, the beauty is in the sheer volume of data that can be collected.
If you are interested in adding your smartphone data to the global map, check out the program at WeatherSignal.
Overeem, A. et al. (In Press) Crowdsourcing urban air temperatures from smartphone battery temperatures. Geophysical Research Letters.