Gamasutra has the story.
I think this is a good thing especially for indie developers and hobbyists. Chances are that you will have access to a lot of tools and libraries needed to develop a decent game for the 360 compared to other ventures like the Linux kit for the PS2. Theres also other advantages such that it is PC compatible. Of course, for MS not to loose their professional customers and not to upset big publishers, the games created thru this can only be played by other people subscribed to the service as well, which costs $99 per year. Still, I think this is great for those that want to get some experience developing on a console rather than on PC.