Light coming from the LEDs goes into the glass, which contains a diffraction grating—an optical component that has slits or grooves as part of its structure. Usually, a diffraction grating is a separate piece of an assembly, but B&N's engineers integrated it into the glass.

This diffraction grating bends and disperses the light throughout the screen. Barnes & Noble really did their homework on this one, because instead of a simple linear diffraction grating (think of a bunch of parallel slits), it appears that the diffraction grating varies throughout the glass to evenly disperse the light.

How do we know it's a diffraction grating?

Lasers. We took a laser and beamed it through the glass panel onto a wall. Unlike the light of the white LEDs found on the Nook, the green laser beam (which is all the same wavelength), was split into the diffraction pattern shown. If no diffraction grating was present in the screen, the laser beam would be projected as a singular dot on the wall.