What the software does: The goal of OpenStack is to allow any organization to create and offer cloud computing capabilities using open source software running on standard hardware. OpenStack Compute is software for automatically creating and managing large groups of virtual private servers. OpenStack Storage is software for creating redundant, scalable object storage using clusters of commodity servers to store terabytes or even petabytes of data.
Why open matters: All of the code for OpenStack is freely available under the Apache 2.0 license. Anyone can run it, build on it, or submit changes back to the project. We strongly believe that an open development model is the only way to foster badly-needed cloud standards, remove the fear of proprietary lock-in for cloud customers, and create a large ecosystem that spans cloud providers.
Who it’s for: Institutions and service providers with physical hardware that they’d like to use for large-scale cloud deployments. (Additionally, companies who have specific requirements that prevent them from running in a public cloud.)
How it’s being used today: Organizations like Rackspace Hosting and NASA are using OpenStack technologies to manage tens of thousands of compute instances and petabytes of storage.
Timeline: Openstack was announced July 19th, 2010. While many components of OpenStack have been used in production for years, we are in the very early stages of our efforts to offer these technologies broadly as open source software. Early code is now available on LaunchPad, with an inital release for OpenStack Storage expected in mid-September and an initial release for OpenStack Compute expected in mid-October.
Many more answers are available in the OpenStack FAQ.