A basic definition is that a slipstream element is counterintuitive, contrary to what common sense or intuition would have a reader and a character believe. At the heart of slipstream is conflict between reality and belief, and that conflict makes the reader feel very strange--disconnected from the known.
Before we go on, you should know my own biases. First of all, I am a speculative fiction author and editor, so that is my sensibility. It's pretty difficult for me to read something "weird" and "fantastical" and not include it in the genre called "Fantasy." Also, some people call slipstream a literary device and some people call it a sub-genre between fantasy and mainstream. I'm in the literary device camp for a few reasons. The effect can be all-encompassing in a story; in other words, it would not be the same story at all if it did not contain the slipstream element(s). But I feel that to name yet another genre at this point is ridiculous. We talked quite a bit about genre at conference and all the genre types are truly mind-boggling. Para-romance, para-thriller, urban fantasy, supernatural suspense... I have a friend who is writing a law thriller/sci fi novel and we keep calling it a para-legal, to his consternation. And by the way, the agents unilaterally wanted writers to name a genre; the editors say please don't--we'll figure out which bookstore shelf to sell to.
Yet another crossroads on the long journey to publication.
Science fiction author Bruce Sterling defined slipstream as making the reader feel very strange; the way that living in the late twentieth century makes you feel, if you are a person of a certain sensibility. This is included in the definition as a courtesy because he coined the term. I couldn't think of a less specific way to define a device or genre, though. Strange is a highly subjective feeling and a vague word. The useful thing about Sterling's similied definition is that it includes the reader in the "strangeness." That is key. Slipstream strives to take the reader's mind two places at once, cognitive dissonance being the primary goal, but it's uniquely dependent upon the reader's subjective perception and experience. One reader might view such a device as weird or incomprehensible. Another might view it as mere commentary. Yet another might view it as a new form of truth.
For instance, if a girl kissed me, I might like it, whereas if the same girl kissed you, she might taste very strange. I guess it's all in what toothpaste you prefer. So, slipstream is subjective. Think Sixth Sense. Were you surprised alongside Bruce, or were you not? If you were, that moment of realization was a slipstream moment. If you weren't, if you caught all the clues, then the film isn't slipstream for you. Both types of people liked the film. So I hate to call slipstream a genre rather than a device: if the reader fails to get that feeling of disconnect, it implies the entire story is an utter failure and disappointment. If it's merely a device, a reader is free to take from a story what he will. Also, slipstream is not the easiest thing to read, and like many drugs, is best taken in moderation.
Some people claim it bridges fantasy and mainstream--join the club, slipstream, you're in good company with all the "para-"s and urban fantasy--though authors often employ fantastical elements that keep it firmly in fantasy for me. For a mainstream example, though, pretend I'm a character and we'll go back to kissing our girl:
I am not gay--I really am attracted mostly to men. However, kissing a girl can be a pleasant thing--just about as much fun as kissing a boy. But, there's that moment, just before I open my eyes, where I think "I'm kissing a girl" and all the social mores and probably some of my primary attraction to boys crash down on me, conflicts in my brain with the pleasantness of another person's lips on mine, and makes me feel very strange. So, if an attitude, emotion, or behavior conflicts with what a character does or experiences, that can be slipstream. Just remember that all important element: the reader must experience the dissonance alongside the character. Therefore, it's all in how it's written.
Another example, in this novel I'm working on (I'll politely refer to it as a novel; I wouldn't want to offend it in the middle of revisions), a character named Kaelin is shot by his mother. Well, she's possessed by a demon who shoots him, but what Kaelin sees is his mother, holding a gun on him. On one level, he's been told there's something wrong with her but doesn't quite believe it; on quite another, he knows his mom would never do such a thing; and in reality, her physical body does do it. However, what keeps this scene from being slipstream is that the reader knows more about the mother (that she's possessed) than Kaelin does at that point in the book. The reader doesn't feel the dissonance, just the character. Not slipstream.
Now onto more of which techniques to employ--what slipstream is and does.
To be clear, and what I believe Sterling meant by his simile, slipstream is a commentary on the human condition unlike no other--it strives to take what you know and make you question it, often by insolence toward reality and condescending to the material. The very device, that disconnect between emotion and knowledge, could even be considered a centric metaphor for how you, the reader, should adjust your world view. This ranges from the cynical to the casual. And again, subjectiveness is key, but the hard core stuff leaves readers startled and unsure, like a child who realizes she's hugging the wrong leg.
As for actual devices, from Sterling himself in his worthwhile, if cynical, article on the subject: A few such techniques are infinite regress, trompe-l'oeil effects, metalepsis, sharp violations of viewpoint limits, bizarrely blase' reactions to horrifically unnatural events. . . all the way out to concrete poetry and the deliberate use of gibberish. Think M. C. Escher, and you have a graphic equivalent.
For my book idea referenced in the last post, I want to play with slipstream elements to symbolize and enhance my character's struggle. He's gay, but his world condemns him for it. He also sees sorcerers for what they are--ordinary people with extraordinary powers, but that very ability to recognize a sorcerer forces him into work he does not want. He can kill--is good at it--but at heart he is peaceful. His religion--the foundation of his world--demands him to be who he is not. Those concepts are more ironical in nature, but I plan to illustrate the ideas through slipstream devices, the biggest of all being that the reader will be led to believe, from the beginning, that sorcery is bad and dangerous, just as our MC believes it. The reader's view will start to change alongside the character's when events turn that worldview upside-down. It should be noted that slipstream often works well when we ground the average reader in status-quo, though it's certainly not necessary.
When my conceptual MC enters the world of sorcery, which overlaps and encompasses his real world and has his whole life, as a participant rather than an enemy, I want to use sureal elements: good, helpful magic; likeable, dangerous people; love he's been taught not to engage in; as well as an overriding realistic element: physical attraction to the same sex, to conflict with what he knows, what he has experienced and believed his entire life (and hopefully what the reader knows and believes): that magic is devilish trickery; that good Christian guys mistrust and hate sorcerers as enemies; that he should not be kissing that beautiful boy at the party. (Diagram that, boyeee.)
I'm also going to employ another device, slash, in which two males engage in sexual behavior. Again, some people call this a genre and I think of it as more a device because if the sex doesn't serve to illustrate a greater theme, I just call it pornography. Slash can be an interesting slipstream ride for the reader, because it's scintillating, especially when you view yourself in the middle; until you think of the actual "behavior," which means two guys are focused on each other's nether regions, which happens to be the LEAST attractive area of a man's body.