It consists of a large lens held vertically in a frame, and attached to an angled mirror. The viewer looks through the lens at the mirror reflection of a picture laid out horizontally on a table.
The device interferes with stereoscopic cues, and it collimates the light, resulting in an impression that you're looking at a real scene.
Special perspective prints were manufactured to work optimally in these devices.
Other zograscopes were portable units made to look like a fake book when folded up.
Optical instruments like this were popular in the 18th century as a form of parlor entertainment.
• You can make your own zograscope with an inexpensive Fresnel lens (less than $10) mounted in a cardboard box.
• Book: A Companion to Early Cinema
• Read more online about zograscopes and perspective prints
• Wikipedia on Zograscope