From what I can tell it's a service that parses websites and apps and displays articles/messages/content etc... as line items.
So instead of jumping around to your favourite websites you simply subscribe through their RSS feed and with google reader your end up with what looks like an email list of articles takes from the websites you follow.
Yeah I've been using Reader for a few years now and really prefer it to having to visit all of my daily websites to see if there are any interesting articles. I'm hoping they either change their minds (considering how much of an outcry there's been) or some other RSS reader steps up and gives us just as good an experience. BTW, the synching between devices/browsers/desktops was awesome for Google Reader.