I was watching the weather channel last night (4/19) and Dr. Greg Forbes (severe weather expert for the Weather Channel) had a great excerpt explaining exactly how this phenomena occurs. Probably the most interesting feature about this volcanic lightning has to do not with the normal lightning strikes that we see in a normal everything thunderstorm, but the tiny, sparks of lightning that people can see through the cloud of ash.
Basically, a cloud of volcanic ash has a lot of different active particles moving around (this is what sets this type of cloud apart from a regular cloud that is merely made up of water and ice particles). So these particles of ash and such are actively moving around and will sometimes collide or slide against each other. Sometimes, the activity is enough to separate the positive and negative charges of these particles, and the impact of this occurring will cause an electric charge (lightning). Forbes describes this as an example of the static you receive when taking off a sweater during the wintertime because of dry air. And finally, what causes the small "sparks" of lightning? Well, depending on how far away the charges split from each other will determine how large the bolt of lightning will be. So the small lightning sparks are a result of oppositely charges particles that did not travel far away from each other.
As I said, the video from weather.com does a really good job of explaining the same concept I had just mentioned. If you would like to further investigate this definitely visit the sire. Also, check out these pictures from Boston.com, they are a little different pictures, more of the volcano erupting instead of lightning. It also had a cool article to go along with it. http://www.boston.com/bigpicture/2010/04/icelands_disruptive_volcano.html
