“The Apple SIM gives you the flexibility to choose from a variety of short-term plans from select carriers in the U.S. and UK right on your iPad. So whenever you need it, you can choose the plan that works best for you — with no long-term commitments. And when you travel, you may also be able to choose a data plan from a local carrier for the duration of your trip.”
It is limited to a handful of carriers in the US and UK right now (AT&T, Sprint, T-Mobile, and EE are onboard). It can also be switched out for a regular SIM card. But make no mistake; this could be the first step towards the end of the SIM card as we know it. It seems very likely that Apple will seek to extend this to more countries and possibly push it out on the next iPhone as well.