It basically begins with an attatchment outlook on parenting. I am NOT going to say it begins with Attatchment Parenting, because I think that makes people feel there's only one 'right' way- it goes far beyond your feeding and sleeping choices. It's developing a relationship with your baby respecting their time of intense needs and doing your best to meet those needs in a non-advesarial way. As babies develop into older children, hopefully you carry over the attatchment and create a relationship based on mutual respect, as well as self respect (both in the child and in the adult).
It is viewed that the problem with punisment is twofold- #1 it doesn't work (at least not long term) and #2 it destroys children's self respect/ self esteem.
As Leanna and Linnis wrote- this ABSOLUTELY DOES NOT MEAN THAT THERE ARE NO BOUNDARIES!!!!! This is not child led or dominated discipline. If a parent feels enslaved to their child's bad behaviour, they are being too permissive.
Perhaps an example to illustrate. Today we went for a walk in the woods. Several of my kids decided they needed to bring gear of some sort or another. I asked them to think about whether or not they'd feel like carrying it all the way back. One child decided to leave her things behind (except for water). The others took their stuff- and lo and behold got sick of carrying it. I had told them up front that I wouldn't carry it- and didin't. They carried their things home (though I also gave them the choice of leaving them on the ground and coming back for them later--but we discussed what might happen to it in the interim). When we got home- they left their things from the walk sprawled across the table. I announced "I see bags on the table!!" They came and got their things and put them away ( The boundary there is not allowing them to leave their things out). When I went into their room to put the toddler down for her nap- my son's bag was on the floor, though the things in it had been put away. I called to him and, pointed to what he left out and said , "Bag!". He put it right away. (Again the boundary is that he needs to put his things away).
I did not need to yell, lecture, threaten, or punish to make those things happen. On our walk, I didn't need to lecture- they experienced the natural consequence of taking too much stuff. I advised them and allowed them the freedom to experience the 'why' behind my guidance...without saying "I told you so!"
Anyhoo- I don't know if that helps at all