You can see him preparing for a high attack (Probably a punch) at first, but when it doesn't come as expected he assumes it's going to be a low attack, and moves his guard down, because he doesn't think the other guy could possibly hit him high from the position. Then he sees the kick coming right at his head and I think his brain just gives up.
Pettis claims he's practiced that kick before, and judging by previous performances, I believe it. I love this guy -- one of my favorite fights to watch at the moment. There are so many awesome potential match-ups for him now that the WEC has merged with the UFC.
I'd encourage anyone to watch this entire fight. Obviously this kick is the highlight (and probably one of the most incredible moves in MMA history), but the whole fight is a really great back-and-forth battle.