The term Mode 7 originated on the Super NES video game console, on which it describes a simple texture mapping graphics mode that allows a background layer to be rotated and scaled. By modifying the scaling and positioning of the layer on a scanline-by-scanline basis, a simple perspective effect can be applied, transforming the layer into a 2-dimensional horizontal texture-mapped plane that trades height for depth. Thus, an impression of 3-dimensional graphics is achieved.
Basically, for lines on the screen, when they're at the top, scale the texture smaller. When they're near the bottom, scale the texture bigger.
Immediately makes me remember Super Mario Kart and F-Zero. This is how they did the fake 3d perspective of the ground before titles like Star Fox came out;and it also explains why the barriers on the racetracks always appeared flat, whereas in games like Stunt Race FX, the barriers were solid. What I didn't realize, was that Final Fantasy VI also used this trick for the world map. Neat.