The short answer is that Chameleon is a blogging tool.
However, it's much more than that. Not only can you use Chameleon to post regular (text) articles, it's also easy to post other types of content on it. And those types not only include sound and image (completely different media types), but also other kinds of content, like reviews, recipes or announcements. The difference with other blogging engines is that, depending on what type an entry is, it will be displayed differently. Recipes may include a list of ingredients and the expected preparation time on top of the entry. This is not only so on the front-end, where visitors will see it, but also on the back-end, where you create your entry. When entering a new recipe, you will be asked to list the ingredients. When making a review, you will be asked to give the reviewed product a score.
Chameleon is all about that extensibility. Types are not the only way to personalize your blog, themes, for example, are another. Themes allow you to modify the lay-out of your blog completely to your personal preferences. With a bit of knowledge about HTML and CSS, you can create your own, unique design. If you don't know HTML or CSS, you can of course always use one of the default themes, or one of those available on this site.
But the most powerful way to extensibility is probably through plugins. Plugins are little add-ons to the main Chameleon application, which allow little tweaks but also major features to be added to Chameleon. Themes, for example, may come with a default plugin, adding some functionality they depend on. Plugins are written in plain Ruby code, so everyone who knows his way around in Ruby can write new plugins. They're easy to hook into the main application, and their functionality will be immediately viewable.
Now, before you get all excited about this, let's get things straight: not all of this has been implemented yet. See the Why Use Chameleon? page for a more down-to-earth (even satirical) view on this, and the Roadmap page for a schedule when all of this might be implemented. Or, proceed to the download page.