I'm not sure exactly what the censors took issue with in the above photo, it seems to be some sort of device with which I am definitely not familiar. More of their work can be seen here and here.
Much-missed The National reporter Matt Kwong wrote this cool feature about this operation back in 2009. The manager explained they are not looking to block out words (that explains how all those embarrassing Cosmo stories stay intact) only pictures. It also included this awesome quote from one of the censors, John Matthews:
"The nude breast photos cannot be sent to the market," Mr Matthews said, while marking up an issue of Vogue. "The Government makes this rule."