The Death Knight is a hero class, which means it won't be initially available for character creation for new players. According to current information, players will need to have a character of at least level 55 to be able to make a Death Knight. It had been thought that the DK would be unlocked by a level 80 quest chain, but Nethaera recently posted that this is currently not planned, since it would cause people to rush to the level cap just to roll a DK.
One thing that's been established pretty much for certain is that the DK will be created as a new character, not as a conversion of one of your existing characters. Blizz didn't want you to feel like you were losing your level 80 mage or whatever in exchange for getting a DK. It is also expected that we will be able to create a DK of whatever race we desire, even though gnome DKs will be awesome/ludicrous (depending on who you ask). People have threatened to quit WoW over this point.
We know that the DK will start out at a relatively high level. It is not known exactly what that level will be; probably somewhere between 50 and 70. My guess would be 55, if that turns out to be the level of the DK-unlocking quest. The stated reasons for DKs starting out high-level are that players are tired of the early levels, and that a level one DK would not be very heroic and this is, after all, a hero class.
But what does a DK do? The Death Knight will be a hybrid tanking/DPS class, a description that could also be applied to Warriors. This will bring a fourth tanking class to the game, which should help alleviate the tank shortage facing many player groups. They do wear plate, but unlike Warriors and Paladins, DKs do not use a shield. Instead, they will tank with two-handed or dual-wielded weapons. More on their unique weapons in the next image.
Here is one aspect of the DK class where Blizzard is clearly drawing upon the lore they established with Arthas in Warcraft III. The Death Knight's power will be closely linked to his weapon, a rune blade. The going theory is that DKs will be restricted to one- and two-handed swords and axes, though I wouldn't be surprised if this was expanded to include other bladed weapons. These weapons are inscribed with runes, and the runes are the focus of the DK's innovative ability system.
Instead of mana, energy, or rage, DKs will have runes. This image is from the 2007 BlizzCon presentation on the DK class. The runes come in three different schools: blood, frost, and unholy, which match the DK's spell schools and talent trees. Activating an ability causes runes to deactivate; the number of runes deactivated depends on the spell's power. The runes regenerate after a cooldown, similar to Rogues' energy (though probably slower).
Blizzard wanted Death Knights to play differently than other classes, with a mix of melee and spells, so they had to give them a different power system. A DK has six total runes on his bar at any given time, and out of combat can configure how many runes of which schools they want available, which will determine what abilities are available and how often throughough combat. Blood runes are thought to be associated with damage spells, Frost with control, and Unholy with DoTs and utility spells.
We don't know too much about what particular abilities the DK will have available, but here are a few that we've seen in demos or heard of. Army of the Dead will summon ghouls to randomly hit things for the DK. Unholy Embrace (an instant with a five-minute cooldown) is a six-second debuff that causes the target to get hurt for 50% of the effect of any heals cast on them, and eats and damage shields on the target. These abilities were both previewed at BlizzCon 2007, and like pretty much everything else we've heard about DKs are subject to change.
There are also a few other spells that we've seen on Death Knights in previous Warcraft games that might be good candidates for inclusion in WoW's DK. The first of these, Death and Decay (pictured), is an AoE DoT, similar to Mages' Blizzard. According to lore sources, Death and Decay is a cloud causing rot and disintegration, as the name suggests. In the WoW RPG, Death and Decay heals Undead instead of harming them, which could make for interesting interactions with a DK's summoned undead minions. This aspect of the spell would probably not apply to Undead player characters, as they are considered of humanoid (not undead) type as far as spell effects are concerned.
Blood Boil is a DoT that, after its duration is up, refreshes two of the DK's blood runes. This was previewed in the newly-defunct Games for Windows magazine. And Death Coil (pictured), now a signature Warlock move, originated with DKs in previous Warcraft games. It is unknown whether WoW DKs will receive Death Coil.
Lore-wise, WoW DKs will be based on Warcraft III Death Knights, as exemplified by Arthas Menethil. These DKs are substantively different than the DKs from Warcraft II. Rumor has it that WoW's DKs arose as Arthas's followers, and the player-created ones are knights that have bent themselves away from Arthas's control, like the Forsaken (Undead player characters) from the Scourge.
Well, there you have it! That's everything we know about Death Knights. Hopefully more information will emerge as Wrath of the Lich King creeps closer to beta and release, so be sure to watch WoW Insider for all the latest Death Knight news.