It uses render to texture. Basically the game spawns another camera that looks out at the room through the mirror like it's a window, renders what that camera sees (at a lower resolution, and I think with lower graphics settings but am not 100% sure of that part) and then pastes it on the mirror as a texture before rendering the main view. It can't do curves like RT can, it only works on flat surfaces, but it works extremely well for those.