This is a really amazing trick. Derren Brown performs some mind reading for an English comedian Stephen Fry. He reveals a thought-of card and this card then appears as his cigarette. What's even more astounding, the card Stephen selected is actually not in the deck!
Click to see Derren Brown perform "Smoke" on www.youtube.com
Derren explained this trick in his Pure Effect, a book I recommend very much if you are into magic.
How did he get the card right? This may be a little disappointing: he guessed. You may have noticed that he never actually says: "You choose the king of diamonds." Instead, he just mentions it as an example. In this case, he got lucky. If there would be no reaction from the spectator, he would continue with a different kind of mind reading. According to Derren's book, there are only 8 different cards in the deck, each occurring many times. So it isn't that hard to get the right card after all. Even if there was no reaction from Stephen when he mentioned the king of diamonds, Derren would be left with only seven cards to guess from. So he would probably start gradually, by guessing the colour of the card first. There he has a 50 percent chance of being right. Regardless of what his guess is, he will get the information he wants. And if he is wrong he can just turn his mistake into a joke or even make it look like he was wrong on purpose. After all, the ending of the trick (vanishing of the card) will convince Stephen that Derren knew the card all along.
After getting the colour, there are still 3 or 4 cards left to guess from. This is where some of Derren's knowledge of body language comes in. He would make a loose statement like: »It's quite a high card.« and then watch for the reaction. If Stephen's reaction was positive (nodding, smiling… ) than he is probably right. However, if the reaction was negative (confusion, no reaction… ), he would quickly change his statement. Again, if he is right or wrong doesn't matter that much at all. What really matters is the information he gets. Once he knows if the card is high, low or something in between, he knows exactly which card it is.
Of course Derren didn't have to go through all this procedure since he guessed the right card in the first try.
And yes, the king of diamonds was in the deck.
But how did the card disappear from the deck?
It didn't. Instead, Derren used a gimmicked deck. When you spread it one way, it shows the faces of the eight cards previously mentioned. However, when spread the other way, it shows the faces of all the cards except those eight. An example of this kind of deck is Mind Power deck.
How did he switch the cigarette for the chosen card? He had all eight cards prepared in advance and then used some sleight of hand to exchange the cigarette for the right one. You can actually see him doing this on the video.
For more information on divining the card, check out Pure Effect. It is especially useful for those who are interested in performing this kind of mentalism themself. It includes a detailed description of the technique and also gives a lot of tips you can use to make your mind reading seem more convicing. I would also strongly recommend other books by Derren Brown.