The current "on-cell" display is layered like a sandwich, with the bottom layer containing the back light, then a layer containing the LCD section (with the red, green, and blue-colored pixels of the display), then a top layer of glass, followed by the touch layer then finally topped off with a layer of tough glass. In-cell display technology eliminates the middle layer of glass, combining the LCD and touch sections into a single layer.This can be accomplished by using the same electrodes to handle the signals for both touch control and pixels of the LCD. We'll have to wait and see if Apple is able to have this technology perfected before the next iPhone launch...something tells me they will!
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