In reply to Tom bits and bytes, there actually have been many advances in the use of capacitive technology in this area. One water level sensor that uses this is found here: http://vegetronix.com/Products/AquaPlumb/. Just to see how far capacitive technology has gone, this particular sensor actually can sense other things than water. As far as I can tell, it is able to sense any liquid - both polar and nonpolar.
Like you, I too am amazed at just what technology can do these days.
No doubt it is not a very innovative way to measure liquid level. But, the main point is the ease-of-use compared to a solution that can be done using opamp. Today technology has evolved and allows liquid level sensing to be implemented using controllers that are primarily manufactured for user interface. Key benefit of using these devices over opamp based implementation is ease-of-use in terms of calibration, integration and reliability. Moreover, a single controller can integrate liquid level sensing, user interface and control functions i.e. a humidifier can be implemented using one-chip.
This metod is not so innovative. Aproximatelly ten years ago I have seen a DIY/Hobby kit which implemented this method. Using few opamps module was able to measure liquid level and convert it to voltage. Probably industrial implementations were a little longer on the market.
It is an interesting piece and talks about an innovative method to measure liquid level. Looks like this solution can be installed even in existing tanks that are in use and that also without much efforts. I believe it will make designers' life easy because it will take away the pain of sensor installation inside the tank and maintenance issues. I am curious to read next part of this article. Expecting to see some more insights on liquid level sensing using this technology.