The idea is that programmers will submit projects to a 10-member Technical Advisory Board, which will work with the OSDL board of directors and choose the winning entries. OSDL has also placed out a hat so people can donate to the fund which will support the fellows.
The importance of a project is not always based on how much money you can make from it. Linux itself wasn't like that. But some projects without big business models, like Linux, can enable other projects to emerge which do have viable business models. Some work seeds, in other words, while other work fertilizes.
If you were a fellow, or could back a fellow, what would you have that fellow do?