What is this kind of card shuffling called?
This is called random pile shuffling. Wikipedia defines pile shuffling as:


  Cards are simply dealt out into a number of piles, then the piles are stacked on top of each other.


Here is a YouTube video demonstrating pile shuffling.

Trivia

At a Magic: the Gathering tournament, pile shuffling by itself is not a sufficient means of randomization.

Two others popular types of shuffling are (warning, these are video links) mash shuffling and riffle shuffling.