In a nutshell, it's a multi-room wireless audio streaming system. There are zone-players with no amps (digital or analogue output), with amps (just add speakers) and all-in-ones. You have to link one of them (or a separate 'zone-bridge') to your router and then that creates the Sonos wireless network which all the others connect to. Because it uses it's own wireless network it doesn't share bandwidth with your existing wireless network, it automatically finds the least congested channel to use, and all your zoneplayers act as both receiver and sender creating a 'mesh', it's a lot more robust than other systems which use your existing wireless network.
There are various control options - the dedicated CR200 controller is great, but pricey. Free options using PC or Mac based applications or apps for ipod, itouch, ipad or android are all great and help to keep costs down.
For storage it's pretty flexible - basically you can point it to music stored anywhere on your network - it indexes it in a few mins and it's seamless from thereon out. Using a NAS is definitely the most convenient option so you don't have to have your computer on all the time.
Various on-line music services are integrated into the control interface - internet radio, spotify, napster, last FM...there are other
I went from airport express-based streaming to Sonos - believe me for 1 zone or several you won't regret it.
Main limitation are that it is audio only and limited to 16 bit 48khz material.
Hope that helps.