The API allows access to data for the catalog of 100,000 movie and TV episode titles. This includes DVD titles as as well as instant watch titles. Applications can request access to a member's account (via OAuth) for working with their queue as well as other movie related account information.
Best of all it's free. We allow commercial use (e.g., a developer can create an iPhone app and sell it for a buck -- that's ok).
I gave a lightning talk about this at the Ajax Experience yesterday in Boston. It both quickly covers the API as well as our first Netflix Hack Day where we exercised the APIs in a 24 hour coding frenzy.
Hacking Netflix - Netflix APIs
Developers can get access by signing up at http://developer.netflix.com.
BTW, there is also a great step-by-step tutorial from Joseph Smarr (he is the platform architect for Plaxo)