That's right, the iPhone dev team have released the jailbreak they have been working on since the betas of the 2.0 software came out. It looks it is a MacOS X application that takes a Apple distributed firmware image (like the kind you get from restoring), and patches it somehow. This is as far as I have gotten, but I suspect you then force your iPhone into restore mode with some magic button presses, and load up the patched firmware. I'm not sure what opens up immediately, but looking through expert mode of the program, it looks like the all important Installer.app is unsupported as of yet. It looks like it installs the Cydia installer. I just found out about this, but Cydia appears to be an apt based package repository of iPhone ports of the usual GNU and BSD userland tools/applications. I think that a Cydia GUI frontend is installed instead of Installer.app, allowing for installation from the Cydia package repos.
I patched my firmware, but then quit out of the program when it reported a failure to enter DFU mode (that is, my iPhone wasn't anywhere near my computer let alone hooked up to it). I think I'm going to wait for the fallout, and see what the blogs have to say tomorrow morning. I don't want to brick my iPhone 3G, but this is just super exciting!