It's called Prologue, and it's a new theme for WordPress.com users and blogs running off hosted WordPress installs. The goal of the theme is to let anyone setup a microblog, either for themselves or as a group--both public and private. Users can post short, to-the-point messages to their blog without having to go through WordPress' primary interface. It's essentially doing what Twitter can't, which is letting people create their own private groups and tag their posts for sorting later on.
Besides its privacy and tag controls, the real power of Prologue is that any WordPress user can adopt it on top of their current blog. It's also got a leg up on the competition by letting other users comment on a Prologue post like they would a normal blog post, complete with conversation threading and a permalink in case you feel like sharing that conversation or single comment with someone else. Sounds an awful lot like a forum to me, but considering Automattic is aiming this at "small groups" it's nice to directly reply to someone without an @username that they have to fish out later on.
In an introductory blog post, WordPress creator and former CNET'er Matt Mullenweg noted that "many" Automattic employees were already using Twitter, but wanted something with a little more versatility and with more privacy controls, which led to the creation of Prologue. The one thing that's still missing is a first party mobile front end. Despite the strong efforts from many third party developers to create their own, there still isn't a simple way to get it done unless you've got your own hosted blog with the right plug-ins, something competitor Movable Type has been a little more proactive about.