What is with this clock?  

similar, sorta...
This place also had one that was just the two hands and it was about 3' wide but it looks as if they discontinued it.
http://www.chiasso.com/shopping/modern-home-accessories/clocks/arrange-w...

Karlsson
A company called Karlsson do several similar models to that, they're available in Heal's here in the UK.
You could contact them to see if they have US stockists ?

US Source
I own one and I got it at Bohemian Home at 2736 Devine Street in Columbia, SC. Phone number is 803-256-0629.

Howard Miller
made some. They show up on e-bay occasionally.
They come with a template that lets you place the hour markers
at a distance from the hands of your choice.
I like the vintage ones that place the clock works in the wall.
The hands are flush with the wall like your photo.
The new one posted is also on e-bay.
http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&Item=350170892522&Category...

Here is an
old catalog page showing all the choices.
I wish they still made them.

Oh yes
Karlsson by Present Time, Robert is right.
This ones belong to the 'DIY time' series.
The only problem I see, is that the one you show, is small and subtle, and the one by Karlsson, is bigger and not so subtle.
Perhaps you also may consider the possibility of making your own real 'DIY', do it yourself, buying just the central part and made yourself the rest a little more to your taste, I would even consider the possibility of leave it as it is. Or as more real DIY, if hands are still big, why not customize it making it smaller.
I think is the one that posted once by MarkTulip, commente d by SDR.
In the once you posted it's seems the mechanism is back, in the other side of the wood (?). In this one is inthe front.
The smaller they have is Diam. 38cm Here is the link with the photo:
http://www.presenttime.com/index.php?id=57&groep=&webvorm=pt/index.php?i...

I don't know in which...
I don't know in which retailer you'll find it.
Here is the info with the distributor in the States.
USA
Present Time Inc.
Sjoerd Brink
Tel. +1 (0) 512441 9533
Fax +1 (0) 512441 9254ussales@presenttime.com
This products, I like them a lot and been following them, I've been to there 'factory' if it can be called like that, or offices in Almere, cause was/am near to work with their products.
But, the only thing I'd say is that the products are not so cheap, and most of the products looks 'very Chinese', (because indeed they are). They try to look them or too pop or too teenager and bright colours so this could hidden the chinese aspect, but many times it's not achieved. Ok, are the products that they have. It's OK.
But this not always necessary happens, I also work with Addex and Lexon, and even if they are also work outsourcing, they look more personal. Addex have better prices and looks much better.
Just in case, for other locations:
http://www.presenttime.com/index.php?id=59/B2B.htm