What's going on?
The Pythagoras cup is a fun example of a siphon, a device that uses gravity to drain a container of liquid. As the cup is filled with water, the short end of the straw starts to fill up, reaching the same height as the water in the cup. Once that water level reaches the bend at the top of the straw, some of the water begins to drain down the long end of the straw due to the pull of gravity. At this point, the straw begins to act like a siphon: the draining water in the long end of the straw creates an area of low pressure at the bend in the straw. The weight of the water in the cup can now push more water into the straw, and this water rushes towards the low-pressure area, up and over the bend in the straw and out of the bottom of the cup. Once this cycle has begun, the siphon will actually drain out all of the water in the cup.
Legend has it that Pythagoras, the Greek mathematician who came up with the Pythagorean theorem for right triangles, invented the Pythagoras cup to encourage moderation when drinking wine. The Pythagoras cup will work like a regular cup as long as it isn't filled to its brim, but if a greedy person over-fills the cup, the siphon kicks into action and spills the entire contents of the cup onto the drinker. Today, it's best use is as a joke cup - see if you can trick your friends!