Several weeks ago Amazon said that Kindle book lending would arrive by the "end of the year," and true to its word, it's here.
The terms are the same as what Barnes & Noble has been offering for a while with its Nook e-readers. On its site Amazon says that, "Eligible Kindle books can be loaned once for a period of 14 days. The borrower does not need to own a Kindle--Kindle books can also be read using our free Kindle reading applications for PC, Mac, iPad, iPhone, BlackBerry, and Android devices. Not all books are lendable--it is up to the publisher or rights holder to determine which titles are eligible for lending. The lender will not be able to read the book during the loan period."
It's unclear just how many books are eligible for lending (it's up to the publisher whether to turn the feature on), but Barnes & Noble has said in the past that more than half of its titles are eligible so we assume a good portion of Amazon's e-book titles will also be eligible.
Amazon has detailed instructions for how to lend out your Kindle books, but it seems fairly simple--you simply go to the "Manage your Kindle" section under "your account" to loan out an eligible title to anyone you want (you just need an e-mail address).