It's billed as "One More Hobby." It hasn't been a big hit, but those who used the Apple TV have shown affection for the device and provided Apple with valued feedback. Apple took this feedback and retooled the Apple TV into a smaller form-factor that clocks in at 1/4th the size of its first-generation sibling.
The power supply is built into the Apple TV along with HDMI and Ethernet connections, and onboard 802.11n WiFi support. It also includes an Apple remote.
The biggest change is that it's an all-rental model, with purchases no longer available. The rentals will all be high definition when available. There is no storage management, and all the content is streamed rather than synced -- including items you have on a desktop computer. Netflix and YouTube streaming is available, along with photo streaming from Flickr and MobileMe.
The new AppleTV will also be able to stream content from an iPad using the just-announced AirPlay in iOS 4.2 that's slated to come out in November. Content is currently available in 6 countries.
Apple delivers on the $99 price point for the second-generation Apple TV. You can pre-order it today, and it will be available within the next four weeks.
Edit: The just-released specs page puts the HDMI cap at 720p.