It's a specific liquid scanner that's done on bottles that have been pulled aside for extra scanning (at least, that's what Frankfurt was doing a couple weeks ago)
As far as I know, it's not. You're now specifically told to not take liquid out of your luggage.
At least that was the situation when I flew out of London Gatwick last time - they had people going up and down before the scanners admonishing people to leave everything in their bags to avoid delay.
We had 4 bags go through, 3 had liquids (2 water bottles and one Barenfang) in them. All three were pulled for secondary screening, at which point they put the specific liquid bottles in a secondary scanner and cleared them.
So, yes, they stay in the bag, but then they're pulled out and scanned separately, at least in Frankfurt.
I've noticed every airport is different, and major airports are usually more likely to have the big fancy looking scanners that help keep the crowd moving along, without taking everything out. Smaller airports seem to have less of that tech and are thus often more of a hassle.
And yet somehow, airport security staff frequently get impatient when people in line ask whether to remove their shoes, laptop, etc. As if the travelers are stupid for asking.
This is a fairly new change - the new scanners are being rolled out "everywhere", but not everyone has them again, and there were some snafu's last summer that caused them all to be decertified within the EU, and at least for a while only scanners from one company had been recertified.
It'll probably be chaos for the next couple of years while this sorts itself out.
