The illusion, staged outside the courthouse, is designed to help George Bluth escape from custody. The set-up has G.O.B. standing on a large bird's nest with a seemingly empty cage hanging behind him. A banner, touting the name of the illusion, hangs against the courthouse wall. The "Free Chicken" banner is likely the reason for the large crowd.
G.O.B. asks for a volunteer from the crowd. The plan is for George Sr. to volunteer, dress in a chicken suit and then be magically teleported into the cage. In truth, Tobias Fünke is in the cage, which uses mirrors to appear empty. He is also dressed as a chicken. A trap door in the nest would deliver George Sr. into the sewer where he can make his escape.
It's a genius plan. It doesn't work.
What went wrong
When George Sr. volunteers, G.O.B. discovers that his own son, Steve Holt, is in the crowd. Wanting to prove himself to his son, G.O.B. takes the role of the disappearing chicken. He drops into the sewer and the crowd believes he has, in fact, teleported into the suspended cage. Though, with Tobias's head bleeding from his failing hair plugs, Steve worries the illusion has severely injured his father.