It's an electronic book that has a paper display (the screen looks like a book page) and can hold 1500 books on it. Amazon sells them and then sells the books. Some are really cheap and most are under $10. A lot are also free.
My mother-in-law includes me in her book rotation with her sisters and my father-in-law because we all are avid readers. She and her husband each purchased a Kindle and was showing me how it worked. I think she said it will keep the place of up to 6 books at one time so that a family can share it. This way, I can register other peoples' Kindles to my account and we can share books wirelessly. It saves paper (since you aren't buying an 800 page book, like I recently did) and considering that some books are only $6, it saves money once the initial cost has been made up for. I got the 2nd generation and cover for $330. I don't like big up-front costs like that, but in the long run, it's well worth it.