I don't know exactly what they use, but I have done this in my backyard.

I bought waterproof LED flood lights on Amazon and mounted them high enough in each tree and pointed up, so that no part of the reflector can be seen from anywhere in the yard. I bought the 20 watt versions, and they seem to be just right for me, but they have 10-20-30-40-50+ watt versions. EDIT: the ones I bought are capable of all colors, so look carefully at all the Amazon listings before buying. Some are just RGB.

It took some trial and error up on the ladder at night, but it looks awesome!! Forest adds some wire mesh to the trees in some cases, which provides more texture for the light, but this is more necessary because they're tall skinny pine trees. On regular trees that most people have in their yards, like a big maple, it comes out really well.

The lights I have (and most of the similar ones available on Amazon) revert back to the setting they were previously on when power was disconnected. So I set all mine to slowly cycle through all colors, and then unplugged them and connected them all to a power strip with a switch. Then when I hit the switch, they all power up at the same time, and the color cycling is all coordinated between all of the lights. Super cool.