The service allows you to see new images as they come into the site and have been popularly rated as interesting (those on the FriendFeed night shift shouldn't confuse this functionality with Tad's Flickr Toy that shows the raw feed as they come in).
The bizarre part comes in with how they presented the information. The pictures show up on a rainbow trail spewing forth from a panda's mouth.
On the original picture the background is derived from, the algorithm and method of selection of the photos is more accurately explained:
"Explore" is basically Flickr's front page, an introductory collection of ever-changing photos to show people the kinds of things inside the site. Each day Explore displays 500 images, but those images are constantly changing, as new photos are uploaded throughout the day.
To some people, Explore is the ultimate beauty contest. It's the pinnacle of Flickr, the achievement of achievements. They fret and conspire and worry, and actually get angry and frustrated, when their perfectly fine photos, never "get into" Explore.
Except it's basically random. No matter how artificially "interesting" you try to make your photos (Explore photos are selected via Flickr's "Interestingness Algorithm", affectionately known as the "Magic Donkey"), Explore is still only 500+ images each day. And each day on Flickr, there are more than five thousand photos uploaded each minute. That's each minute.
As for the Panda barf? A complete mystery that remains unexplained.