It's an eBook reader.

The original Kindle (and Kindle 2) have a 6" display, and the units themselves are about four inches by five inches. They use an e-paper display to show text. The reason for using e-paper is that it needs now backlight and is thus easier on the eyes. E-paper also uses drastically less power than an LCD or OLED display, as the only power needed is a quick burst to change pixels to and from black.

The Kindle DX uses exactly the same technology, and has a 9.7" display rather than 6". This allows it to show larger pages, such as newspapers and magazines, which is what it's being marketed as - a newspaper reader (it will supposedly save the fourth estate from the technological revolution).