It's been quite a while since I first heard about it, but IIRC they were seeding cryptographic PRNGs with entropy from multiple sources, one of which was allegedly this art installation.

Seeding PRNGs with sufficiently unpredictable data was a real security concern for a while. New cloud instances have a small entropy pool space for attackers to enumerate due to lack of a real source of randomness. (See the Debian/OpenSSL issue for what can happen when your entropy pool is too small/predictable)

One fun fact about XOR is that anything XOR'd with a uniform random distribution results in a uniform random distribution, so there isn't any harm in mixing additional non-attacker-controlled entropy sources in as long as at least one of them is sufficiently unpredictable. The lava lamps provide a potentially hard-to-predict source of entropy for this, but if it's not available then it certainly doesn't "take down the internet". They'll still use packet arrival timing, interrupt timing, etc to seed their CSPRNGs.