What is Bodystorming?
In my opinion from reviewing the resources below and other resources I think that there are three different ways Bodystorming is being used.
Bodystorming Type I
Working in the Space/Place your product will be used in - Let's say you have been hired to build a new cash register interface for a cafe down the street. Bodystorming I says that you should go the the cafe and do your work there. I didn't say analysis, but work. So go there and do all your design and coding there. The idea is that just be being in the environment for which your product is supposed to be for you will build it better. Things such as loud environments, feelings of safety or crime prone areas will be hard to ignore.
Bodystorming Type II
Strong Prototyping the Space/Place your product will be used in. Lets say you have been hired to build a new handheld device that will work in the hallways a submarine . Bodystorming II says that you should construct out of cardboard what the hallways of a submarine would be. Perhaps make the lighting the same (maybe red lights?) So you have test out your handheld in the "simulated" environment. Perhaps it doesn't have all the properties of the actual field environment, but it should have some of the more important aspects of the setting. Then change constraints such as lighting, or how easy it is to walk through such spaces while holding on to PDA.
Bodystorming Type III
See blog post Tips for Better BodyStorming on Type III
Use Case Theater (Prototyping the Space/Place your product will be used in using "actors" and "props".) Let's say you have been hired to build a new hot-dog vendor stand. Bodystorming Type III says you should get a perhaps 3 or 4 of your co-workers and have them act-out the the different roles. So you have one person be the vendor. Another person ordering their hot dog. The other people waiting in line to order. Perhaps you have them run through it for a couple of takes and you can watch and see what happens and perhaps change things up to explore different options. Such things as how long it take to service 10 people with one vendor versus two vendors, or if you add a form for people to fill out instead of telling the vendor their order.
IDEO bodystorming methods Inside their method deck
Book “Extra Spatial” by Fred Dust of IDEO fame, 2003, Chronicle Books
Putting the users center stage: role playing and low-fi prototyping enable end users to design mobile systems Svanaes and Seland in 2004