There are a bunch of technical explanations, but those don’t mean a lot to many SL modelers. It is probably more helpful to know what you can do with it and why you would want to use it. So, this video does the best job of explaining that I’ve seen.
This feature is a work-in-progress. It is looking like we will have it in Blender 2.8. But, it won’t be complete. Still it will make adding materials to models MUCH easier, cause you can see what you are doing in real time.