XGL uses a special xserver and a a special window manager / compositor called compiz which supports growing number of plugins to provide truely amazing visual effects for your existing X windows applications.
The Xgl project has recently been included in freedesktop.org and is now finding its way in to several distros such as Ubuntu ,Gentoo , OpenSUSE and a live cd distro called Kororaa. Normally eye candy gets a derisive response from linux users but when its done this well it actually helps productivity, once you get over the coolness and stop playing that is.