Sounds like he might have been playing an Overtone flute, which is a whistle with no finger holes! The notes are overblown, with the open end being stopped to give the extra harmonics. In Norway these are known as seljefløyte, and are surprisingly versatile.

http://www.youtube.com/watch?v=qlCxUyUY378

Other types exist, with increasing popularity, the world over. If you tape up all the holes of a Generation Bb you'll get an idea how it works. The bellows drone would have been a Shruti Box.

The three-hole pipe is a little different in that its basically a three-hole penny whistle that plays a diatonic scale in the upper octaves, thus leaving a hand free for self-accompaniment:

http://www.youtube.com/watch?v=zS__oBFqVik