I really think it's something close to a real-world genjutsu. I don't think he slows down time. I think it's very possible that the ability makes his opponent "think" that the time between two points was slow/fast. Using that, he would be able to, instead of slowing time or teleporting, make his opponent act and think slower making himself appear as if he was teleporting. In his designated radius, the ability makes people think and act slower than they normally do. This basically gives a huge hit to the opponent reflexes.
For example, when Madara charged at Sasuke he activated the ability and made Madara move/attack slower and think slower such that he didn't register Sasuke's movements and didn't notice him moving.
I'm just throwing this possiblity out there because Naruto was able to affect the body of other people so it makes sense that Sasuke might be able to affect their minds.
Though, Madara said that Sasuke "This is... He didn't simply move...!!"="Koreha... Idōshita no de wanai...!!" so I'm not sure what to think since Teleporting is known as "Instantaneous movement"="Shunkan Idō".
At any case, we'll get the answer next chapter hopefully.