The resistors change the voltage of the resulting signal. So the Microsoft keyboard probably checks whether the circuit is closed and the voltage to determine which keys are actually pressed.
The idea is that by using resistors (which are much cheaper than diodes), any "indirect paths" that go through more than 1 switch between the rows and columns will decrease the voltage sensed on those, while the voltage on the ones that go through only 1 switch is higher.
They say they've patented this technology but in fact it's been used for (smaller) keypads with microcontrollers for a long time before that; I remember reading some application notes that showed this technique.
