The full details can be found at the above link, but in essence they say:
Adults will remain able to see all content on the site unless prevented by the existing security settings.
The primary goal is to give you the ability to mark your own content so that kids aren't seeing stuff that is meant for adults.
You now have the option to flag other people's content that you think is inappropriate for users under the age of 18. However, nothing will happen to that content unless multiple people flag it. Only then will it be sent to the Abuse Prevention Team for review.
If your content is flagged by other users, adults will still be able to access it as long as they have the appropriate permissions.
So basically each user can now flag individual entries, or indeed their entire journal, to indicate:
'Adult Concepts' Content that is not explicitly graphic, but may contain mature themes that could be inappropriate for anyone under the age of 14.
Explicit Adult Content'. Content that is graphic and explicit (depicting nudity, sexuality, or violence) that is appropriate only for adults and is not suitable for anyone under the age of 18. This label does not imply that the content is considered obscene, just that it is not appropriate for minors. We recommend that a journal or community is set as "Explicit Content" if more than 50% of the total entries have graphic or explicit images or text.
If you wish to flag your entire journal or one of your communities with either 'Adult Concepts' or 'Explicit Adult Content' then you need to go to viewing options.
I haven't read the full thread of more than 2,000 comments, but the biggest issue that seems to keep coming up is other people flagging your entries and how that is open to abuse, e.g. 'you hated my story so I'm going to flag all your entries with explicit adult content', etc. etc. and how LJ is going to handle that. As yet there hasn't been an answer to probably the biggest question 'And the appeals process for a user who feels their material has been flagged inappropriately or maliciously is...?'. e this thread
Ah, further down this thread, marta (the person whom has joined the LJ team to answer questions on this new tool) says: False flagging can result in the user's "flags" no longer being counted towards the threshold for review.
Out of interest, are people on my flist planning on using this tool for themselves? Are you going to make an overall setting for your journal any communities for either of the levels?