I don't believe in deprivation, but I do believe in limits and moderation. If you want that chocolate cake, you should be able to have it; however, wouldn't it be better to find a way to recreate the chocolate cake and reduce the calories so you can have it anytime and not feel guilty? That's the idea. Cook Yourself Thin has some great recipes for just that.
This isn't a diet, it's a new way of eating. I want to eat out at any restaurant with friends and family and not ruin my whole day by making smart choices. I don't want to have to be the one who prevents everyone from going where they want or missing out because "I'm on a diet".
Regular exercise (cardio and strength training) is a must. At least 30 min - an hour of cardio 5 days a week is ideal, mixing in strength training 3 days a week. As long as I keep what I put in at a deficit of what I put out, I don't see how this can't work.
Also, a 'cheat day' (though I don't advocate them) isn't so bad when you're still in the negative!