Google is still using PHP or some other language to process the login - they just added some parameters that their script uses.
This portion actually points to a script like login.php...you just can't tell because the URL is rewritten
This sets $_GET['continue'] (assuming they use PHP) to http://www.google.com/webhp
. That's likely where you go after you login.
Equivilant to ?sourceid=navclient. This is setting the $_GET['sourceid'] value for the webhp page.
&ie=UTF-8 (content encoding)
for more info on URL encoding (all those % codes).
Google really isn't doing anything special...they just send some helper values to their login script so it knows how to do a couple things.