It's a software thing. My camera has noise cancellation built into it. It analyzes sound as it records it and muffs (cancels) sound it recognizes as unnecessary background noise, or in some cases can ease overbearing noises such as wind, cars, someone speaking directly into the mic, etc. It works quite well if it's been implemented, actually. Depending on how the software is designed, it can also prioritize sound based on intensity. If the person holding the camera is speaking, it can prioritize that audio and cancel out much of the background stuff.
A lot of this is software dependent, so it's going to depend on how HTC has implemented it.