Recs.
Updated
Wayland is intended as a simpler replacement for X, easier to develop and maintain. GNOME and KDE are expected to be ported to it.
Wayland is a protocol for a compositor to talk to its clients as well as a C library implementation of that protocol. The compositor can be a standalone display server running on Linux kernel modesetting and evdev input devices, an X application, or a wayland client itself. The clients can be traditional applications, X servers (rootless or fullscreen) or other display servers.
Part of the Wayland project is also the Weston reference implementation of a Wayland compositor. Weston can run as an X client or under Linux KMS and ships with a few demo clients. The Weston compositor is a minimal and fast compositor and is suitable for many embedded and mobile use cases.
SpecsUpdate
Pros
Pro Easy to maintain
Wayland has no drawing APIs. Instead, a Wayland client gets a DRM buffer handle, which is practically just a pointer to a graphics memory. Practically Wayland does not care how the client draws to that buffer, it only copies the client's buffers on the screen.
The removes a lot of complexity (because Wayland just pushes the complex stuff to the other layers of the stack) and by making the clients responsible for all the rendering, they can be smarter on how they do things like double-buffering for example.
Cons
Con XWayland handles popup windows poorly
Con Little driver support
Most closed sourced drivers do not support the KMS/shared-GEM/shared-DRM technologies on which Wayland works. While this may be okay for open source purists, who only want to use graphic cards that have open source drivers available, it may not sit well with people who spend a lot of money for high-end graphic cards only to get some crappy 3D performance.
Although it should be noted that NVIDIA has declared that they will start supporting Wayland, it may take years before Wayland fully supports most high-end drivers.
Con Superior technology but still not ready for everyday use
Wayland is great for developers, it's both technologically and architecturally superior to X, but X is the de-facto standard display server protocol for the *nix world for so long that you can basically expect everything to work with X (user applications, graphics drivers, DEs, etc. etc.) which cannot be said for Wayland. Actually there are still too many issues with Wayland that I think it's still far from being ready for the general users/consumers today. It seems there are still years of work ahead before Wayland can fully replace X as suitable for everyday use other than running some GUI text-editors and IDEs for coding, and maybe by that time both Wayland and X will be replaced by something newer... Wayland surely has superior technology and design, but those don't necessarily mean much for the general users today (remember the RISC vs. CISC war back in the 90's, and that back when Linux kernel was first developed, it is arguably inferior to the MINIX kernel in terms of technological advance and architectural design)