It's a Firefox extension that lets you easily eavesdrop on people. It reads/steals cookies from users on unsecure connections and masquerades as those users. From there, any computer running Firesheep can see your emails, your Facebook account (messages and all), and a whole lot of other things.
As Butler explains in his post, "As soon as anyone on the network visits an insecure website known to Firesheep, their name and photo will be displayed" in the window. All you have to do is double click on their name and open sesame, you will be able to log into that user's site with their credentials.
Eric Butler developed the extension and made it freely available in order to point out how much information is freely available over unsecured networks.