The core idea behind Jabber is to have an instant messaging protocol which is extensible enough to work with many other IM protocols transparently. Two years ago, XML quickly entered Jeremie Miller's mind as an easy way to achieve this. One kuro5hin user asked how this fits into JWZ's ideas for unity of interface, and when looked at this way, Jabber clearly unifies all of the protocols it supports under a single protocol, so to clients, every protocol (ICQ, AIM, Yahoo!, MSN, and even IRC) is exactly the same.
How does Jabber do this? Jabber, like all major internet services (smtp, http, etc.) is not bound to a single server. Anyone can run a server, and all of the servers can talk to one another. A JabberID consists of user@server, just like email. The major insight Jeremie had was that all translation between protocols should be done by the server, instead of other multiple protocol solutions, which rely upon the client to do everything. This way, a client just has to support Jabber and the ability to register with other protocols.
Jabber supports other protocols through programs called transports. These transports convert the foreign protocol to Jabber's XML protocol, and talk to the main Jabber server process using etherx. Currently there are transports for ICQ, AIM, MSN, Yahoo!, IRC, and a very recent addition is RSS. All of the transports are currently alpha quality, but are maturing quickly and will hopefully be officially released soon.
Probably one of the most asked questions by Open Source users is whether Jabber will be secure. Currently, most clients do use plaintext to communicate with the server. Fortunately, you can run a server on your home computer if you really want, but that doesn't solve the problem. Jabber server supports SSL communication with Jabber clients, and it's just a matter of getting the clients to use it. I'm very interested in giving my client (Gabber: The GNOME Jabber Client) SSL support, and will try to do it as soon as I can. There are also plans to integrate GnuPG. Since Jabber has eMail-like IDs, it will be relatively simple to integrate.
How will Jabber benefit the whole community? Even if the community doesn't care about instant messaging at all, there is no denying that there are many people in the general public which do use it. I believe that AOL will slowly merge AIM and ICQ, creating the single largest instant messaging system in the world. No other instant messaging system can even come close to AOL's current combined userbase. They would then be free to completely close of the protocol and take measures to stop anyone else from creating clients. This would be an utter disaster for open protocols. That is why Jabber is needed now, to allow everyone to talk to one another, and slowly move them over to an open protocol. If it so happens that this protocol runs on Open Source server software, that will be a major gain for the community. I don't think we want everyone using MSN Instant Messenger and Microsoft's servers, even if that protocol is technically open for the most part.
If an Open Source instant messaging system does become popular, I think that the general public will respect the community much more, and realize that the Open Source model really can create systems better than anything currently out there. Yes, there is Apache and BIND and other fundemental pieces of software (including Linux itself) which are Open Source, but instant messaging is something that nearly everyone in the general public can understand. The last statistic I read about AOL said that it had more than half of the Internet users in the United States signed up on it. How many of those users truly understand exactly what Apache and BIND do, and how vital they are to the Internet? Maybe after some explaining, but they'd more readily understand something like instant messaging being open for anyone to write a client for and anyone to use.
In conclusion, I feel that Jabber is not vital for the survival of the Open Source community, but it will greatly aid the cause.
Please feel free to ask further questions about Jabber, and if you have the time, check out The Linux Show. On the 16th of May, Temas, DizzyD, myself, and Doc Searls were on discussing Jabber. Unfortunately, they have up to an hour of music before the actual show in the archive. Further information about Jabber can be found on Jabber.org - the official developer site, JabberCentral - the official end user site, and Jabber.com - the future site of Jabber, Inc., the company which will be supporting many of the core Jabber developers.