The trick is selectively blurring areas of the picture using gradient masks to mimic the effects of a restricted depth of field. There are several ways this can be accomplished, but the quickest is to use Photoshop's Quick Mask feature.
You'll find this at the bottom of the tool palette. The button icon is a rectangle with a circle in it.
In Photoshop, a mask is a way of blocking out an effect from the rest of the image. Think of it like a stencil. If you cut a shape out of a piece of paper, lay it on a background and then spray it with aerosol paint, the paint will only cover the areas of the background not masked by the paper stencil. Photoshop masks work in exactly the same way. Quick Mask is an enormously useful tool for making complex selections and masks, because it allows you to edit the mask using any of Photoshop's painting tools. In this case we're going to use the gradient fill tool. In Quick Mask mode you paint with either black, which creates the mask, or white, which erases it. You can select and switch between these colours by clicking on the background/foreground colour button which is just above the Quick Mask button on the tool palette. For the effect we're applying we'll use the white brush, to define the area we don't want masked.
After selecting Quick Mask mode and the Gradient tool, click and hold the left mouse button on the bottom edge of the picture and drag a line upward to the top of the foreground area. If you hold down the Shift key while dragging, the line will be constrained to the vertical axis. Release the mouse button and the gradient effect will be applied. The image should now look something like this, with most of the picture covered by the semi-transparent red of the mask, fading into a narrow unmasked strip at the bottom.
If you now exit Quick Mask mode by clicking the button again, you should see a selection marquee that looks something like this: