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Looks like it's available by default on all non-DRM'ed Kindle titles, and only available for a select few DRM'ed titles. You can tell whether it has the feature before purchase by looking under the Product Details section, where there's now a category called "Lending."
Someone needs to start a lending library program (forum thread? website?) where people list books they want to read and give an email address, and people who have already bought said books can use up their "single loan coupon" for a stranger. I'm not sure there'd ever be enough participants or eligible books to make it work, but it'd be a nice way to share with others.
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