No, it's not a variation of 'Musical Chairs'. They are diapers that play some kind of tune or song when they are wet, so it's easier for kids to realize when it's time to go. I learned about this on the morning radio show thing, where they were listing songs that could play (like Drop it Like it's Hot by Snoop Dog).
I could see the benefits of this, but a caller did bring up a good point. Would you be conditioned into ending up peeing everytime you heard that song? I can't really find any articles on any actual products, but I think this explains it.