I also worked on this example and this was very interesting to broaden my knowledge on masking trick in after effects and this can be very useful for many VFX effects in films. It is a bit trick and needs lots of patience to get the right lighting and as well the right timing when the towel falls down and to make sure there is no jump. Though the example I produced I wasn’t able to get the right lighting amount and there is a noticeable jump but I worked around to fix the lighting and jump with syncing the video and as well the masking feather effect. At the end I applied a black and white colour effect which made it perfect.
Tutorial and the actual video shows the step by step of towel magic trick.