The blog post which explains everything: http://blog.twitch.tv/2014/08/3136/
How it works:
The Audible Magic technology will scan for third party music in 30 minute blocks — if Audible Magic does not detect its clients’ music, that portion of the VOD will not be muted. If third party audio is detected anywhere in the 30-minute scanned block, the entire 30 minutes will be muted.
Audio Recognition will only be run against audio in VODs. We are not scanning live broadcasts and there is no automated takedown of live content.
It also affects their own videos, which is ridiculous! - http://www.twitch.tv/twitch/b/548824097