From the update page:
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The software update includes general improvements and the following new features:
Collections: Organize your books, audiobooks, and personal documents into one or more collections.
Pan and zoom in PDFs: Zoom into PDFs and pan around to easily view small print and detailed tables or graphics.
Password Protection: Protect your Kindle with a password when you're not using it.
More Font Sizes & Improved Clarity: Enjoy two new larger font sizes and sharper fonts for an even more comfortable reading experience.
Share what you're reading to Facebook and Twitter: Share meaningful book passages with friends on Facebook and Twitter directly from your Kindle.
Popular Highlights: See what the Kindle community thinks are the most interesting passages in the books you're reading.
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... and I just read this on the Digital Reader blog:
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If you do not update the devices' software by March 22, 2016, you will no longer be able to access Kindle services or get the update via Wi-Fi or a wireless connection. To resume access, you will need to manually update the software on each of your Kindle devices.
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