Using sponge to act as a stylus pen for Android phone and tablet? I am amazed that one can create a DIY stylus pen for Android phones and tablets using the sponge as shown in this video.

Is it true or it is simply just a fake video?
It is true. But not all touch screen phones work well with this.

The capacitive touch screens that we find in most android phones these days work by detecting electrical disturbances from our body. The 'sponge' used in these DIYs are electrically conducting foam and they transfer the charge of our body through it, thus registering touches.

On the other hand, these sponge tipped styluses obviously won't work well with resistive touch screens unless you apply some amount of pressure.