Both "normal" automatic transmissions and the Prius use epicyclic gears. The main difference between the two would be that an automatic transmission in normal operation has one power input (the engine) and one output. As bprater alluded to, any variation in gearing is achieved through fixing different parts of the transmission.
The Prius has two electric motors and a gas engine. It's not a CVT in the traditional sense though, this simulator does a good job of demonstrating how it works(implemented in Flash, not D3...) http://eahart.com/prius/psd/
That simulation is absolutely fascinating. I knew hybrid cars were packed with loads of advanced electronic tech, but the use of epicyclic gears as the PSD is pretty cool.
Toyota's HSD system uses such a scheme, but mechanically, Honda's IMA replaces the flywheel with an electric generator/motor, the remainder of the drivetrain being your typical car (they use either a CVT or a manual stick, depending on models and regions). The key then is entirely in the logic driving the electric motor and the VTEC system.
No, he's not. A CVT doesn't have fixed gear ratios (that's where the continuous comes in). A traditional automatic transmission uses planetary gears to have a fixed number of gear ratios.
