Sintel is the third open movie project from the blender foundation funded mostly through pre dvd sales of the film (with all the associated production files) the blender foundation have used these film projects to advance the technical capabilities of Blender as well as promoting it as a serious platform for production use.
Previous projects like Orange and Peach (which became the elephants dream and Big Buck bunny) have introduced things like hair and fur more advanced animation techniques fluid simulation and various advances to the renderer and modeling software.
For the Sintel or Project Durian they have been developing the next major release of blender 2.5 which has a massive overhaul of the compete interface a massive number of improvements to the rendering engine as well as a host of addictions like volumetrics, smoke and fire simulation, indirect lighting, various improvements to the sculpting systems.
Blender 2.5 is currently in alpha 2 (you can download it for a play on the blender website www.blender3d.org) and they will typically release the finalised new version of the software when the film comes out along with all the files so people can take apart what was done and learn from it. So far they have gotten to this trailer which is looking pretty good.