it's a set of subscription-based webtools that work well on the mac.
you get 100mb webspace, which you can use as a hard drive (iDisk) which can be synced from any mac. you get your own .mac homepage, and email addresses which you can use with iChat AV and Mail.
you can publish from iLife directly to your webpage, your iWeb site can go directly to that, as well as iphoto pages or slideshows. it's basically apple's wy of making the internet easy.
the downsides? $99/year is a lot for a tenth of the space you even get on most pendrives these days, and also the websites created by iLife, while looking ok, are quite badly optimised usually, and don't follow standards.