This is a great book from Chris Anderson, a Wired editor, describing the real inovations that they Internet is bringing to the market.
Having worked on MSN Search before, I have to say this is not big news. We always understood the power of the tail. At the time I worked on MSN, the "tail" was responsible for 2/3 of our traffic and revenue.
It is hard to define the "Tail" (since I'm not a writer), but it is easy to understand. In any business you have the "hits", products that sell way more than anything else. On MSN, the "hits" were the top search terms like "sex", "hotmail", "maps", "pictures", etc. The tails are the queries that occur just about a few times a day, like "haircut in redmond", or "how to fix canon battery flap".
In the context of Amazon, their hits are the bestseller, but the tail represents a huge portion of their sales. If you are in any business that has "hits", it certainly has a tail and you probably can tap into that to either grow your business, or to create a new business that is supplying a demand for that untapped market.