A combination of radiation shielding and the pressure vessel, methinks. I'm not familiar with that specific book, but you're right; the concept's not exactly new.
The problem with long-term habitation of space is that we're the product of billions of years of evolution in a very specific environment, which so far we've been unable to find anywhere else in the universe. We've found some possibilities, but so far none have been definitively confirmed to possess the key ingredients; a mass no more than about double that of Earth, an oxygen-containing atmosphere, and liquid water (which in turn requires the planet to orbit in the "Goldilocks zone" of its star). Any good possibilities would be several hundred years' journey using current propulsion technologies; most orbital masses in our own neighborhood are either too light, too heavy, too hot, too cold, or didn't have the right mix of stuff. So, instead of trying to terraform nearby space rocks to accumulate an atmosphere (a pointless exercise), or mining our own finite resources on Earth to create habitats, we dig into a rock and make habitable spaces inside.
The idea would basically be to mine the asteroid from the inside out, creating first a network of tunnels and then larger caverns within the rock structure. The entry point into the asteroid can be sealed with an airlock relatively early in this process, and the hollow space filled with an atmospheric mix. The only problem would be finding asteroids with a dense, nonporous composition that won't bleed out the atmosphere we try to introduce over time, located in an area of space that's easy to get to and where collisions are unlikely (the asteroid belt isn't a terrible idea as it's had some 4 billion years to settle down, but it can still be dangerous), and then find some way to get the necessary equipment and atmospheric gases out to it. Nearby asteroids might be found with interior reserves of water ice, or we might harvest comets or even the outer layers of the "ice giants" for water and inert gases. Electrolyze the water to produce oxygen, add sufficient amounts of a relatively inert gas like nitrogen or argon, and add some lights powered by solar panels on the 'roid's surface, and you have a rudimentary space habitat. Build traditional enclosures, or just carve what you like directly out of the rock. As you dig, anything valuable as a building material or for export can be sent back to the Mother Planet. By the time the digging's done, you'll have large cavernous spaces suitable for zero-G heavy industry using materials from other minable asteroids, and hopefully a "freight elevator" airlock system that was originally used to get mining equipment in and rock out, and can now be used to get raw materials in and finished goods out. The asteroid becomes a city in space, developed much the way the American West grew up.
