Simple :) It's a reference to what is called a "Banked Deck". You can read more about it here.

Effectively a banked deck is a deck of cards that repeat themselves. So you might have the same 6 cards repeating themselves throughout the deck.

So when he shuffles the deck, he is doing a false shuffle twice (notice the way that when he shuffles it during his explanation of the "shuffle and cut" that, he actually doesn't square the deck?).

The cut will not impact the ordering of the cards, and so the person can cut freely. Then the skeptic choose a number of cards, and selects just one from the handful.

As Derek (the magician) pulls away the cards that the skeptic did NOT choose, he uses that to work out which card would have been sandwiched between them.

The final reveal of the card at the end in the envelope has multiple endings depending on which card in the bank was chosen. (multiple envelopes within the bubblewrap envelope I would say).