I'd heard of this before, and used this type of technique to remember names or lists in the past, but it never occurred to me to try it with chess.
I will say when players remember a game or positions from games they played days, months, even years later it's because each move has this elaborative encoding he mentioned. The position and moves tell a chess story. The more you know about chess, the more subtext moves have, and the more you'll remember. But like I said it never occurred to me to add another layer of it. This would be useful (to me) when trying to remember some dry boring opening position and variations (if I've never played it, then it lacks a lot of chess subtext, and wouldn't be easy to remember at first).
Improving memory.

Good day gents,
Recently, I have read some cool books, wich, may have nothing to do with chess, but the ideas may be applicable for improving chess in general but especially for improving the memory if this indeed works.
The book I'm talking about is Joshua Foer's: Moonwalking with Einstein, if you're interested, here is his TED talk about memory:http://www.ted.com/talks/joshua_foer_feats_of_memory_anyone_can_do.html
So, I think that if you can imagine the chess board in a more interesting way, you can improve your memory.
Basically, to imagine how a real battle field would look like, but than in the format of a chess game you know?
The more you intensify the image, the better your memory will become.
Let's give an example here just for laughs.
White begins with e4.
To put it in practise here comes the story:
The e2 square is a dense forest, with trees all packed together with red leaves that are slowly falling to the ground because it's September this time of the year.
Walking through the e2 square, is none other than Gandalf the grey who is set on a journey to fight Sauron, the black king of the north.
So Gandalf goes through the fiery fields of e3 and into the mines of Moria to e4.
Black d5.
But the red eye sees all, and thus, the Black king sends his best Orc assassin to meet and kill gandalf in the mines of Moria.
The Orc assassin tries to do a sneak attack on the old man, but, Gandalf uses his experience and magic to anticipate the attack. Gandalf uses a spell to blind the Orc, and kill him with a backflip tornado sword attack.
White takes d4.
The more powerful you make the image and the more details you put into the story, like say, the smell or how cold it is or what clothes the people are wearing, the better you will remember. Violence, food and sex seems to work best to make it interesting.
I do agree, that it takes alot of time to actually make a story like this, but on the plus side it is quite fun and you will remember things easier and become more creative.