Photopass is the name of the system of having Disney Photographers take your photo throughout the parks. They'll be at the entrances, with characters or other great photo stops.
When they take your photo, they will swipe a Photopass card and give it to you. You can then use this Photopass card for the rest of your trip and have all the photos put onto it. This card gives you the ability to buy the photos at home rather then at the parks.
Before Photopass, you'd have to buy the pictures you wanted before you left the park. Now (since they started calling it Photopass and swipping cards) you can buy them from home using the number on the back of your Photopass card.
They are the same price either in the park or at home. $12.95.
Photopass picture taking is free to do until you purchase photos.
The Photopass CD is also new. They will put all your photos taken with Photopass onto a CD for $100. Then you own them and can print them however you want to. This is a great thing if you have LOTS of photos taken. But remember you still have to pay to have the photos printed. The CD can fit up to 400 photos on it.
I hope this helps.