As well as gorgeous new visuals, the remake boasts a re-orchestrated soundtrack, new areas and an expanded story. As to what Dear Esther actually is, well, in developer thechineseroom's own words, it "replaces traditional FPS gameplay with the exploration of a desolate island, a deep and emotional story and a stunning soundtrack." It's a strange, delightful, partially randomised and interpretation-heavy story-y thing, basically.
The remake is the work of Robert Briscoe, a level designer on Mirror's Edge, and creator Dan Pinchbeck. The pair have secured a Source engine license from Valve and intend to launch Dear Esther on Steam this summer. For now, you can get a broad feel for what it'll be like by downloading the original HL2 mod from FileShack.
As you apparently cannot have a press release without "a contentious strap-line," Pinchbeck teases "we're going to answer once and for all the question of whether games can be art." Everyone, please write your own answer on a postcard then burn it.