As a side note, by my count there have alredy been nine major releases of D&D -- the original booklets, three versions of the Basic Set, two versions of AD&D, the "Rules Cyclopedia", "3rd edition" and "3.5".
Mechanically, there are to be a host of changes under 4th edition, unlike the "3.5" update. My impression is that the biggest change is trying to undo what Mike Mearls called the "five minute workday." This means a bunch of resources (mainly spells) that recharge once per day, which means that the party runs out of resources and has to hunker down and sleep after just a short period of adventuring. Second biggest is a push for less of the "Christmas tree" effect, meaning how higher level characters have to be loaded down with more and more magic items to be considered balanced. Mostly, though, there seems to be a lot of tweaking of small bits of balance. James Wyatt described:
The reason there's a "sweet spot" in the current game is that it's the approximate range of levels where, purely by coincidence, the math of the system actually works. In those levels, PCs don't drop after one hit, and they don't take a dozen hits to wear down. In those levels, characters miss monsters occasionally, but less than half the time, and monsters miss characters only slightly more often. It's pure chance, really, but it means the game is fun. Outside of those levels, the math doesn't work that way, and the game stops being fun.
In Fourth Edition, we've totally revamped the math behind the system, and that's a big part of the way that we've extended the sweet spot across the whole level range.
What's Its Target Market?
I think a big part of the aim of making D&D4 easier is to try to draw in new players. To a large degree, I think that D&D3's success was in recapturing former players who lapsed during the nineties or even those who were only part of the eighties D&D fad. However, that base is aging. It seems to me that 4th edition is trying for younger players who are interested in fantasy games. In particular, I suspect that there is some fraction of World of Warcraft and other MMORPG players who might be amenable to tabletop RPG play. D&D only needs to get a few percent of the millions of WoW players to make a huge difference.
With only vague rumors about the new rules and background, I can't say about whether they're doing a good job of distinguishing the tabletop game from online games.
So what will D&D4 mean for role-playing as a whole? D&D is about half the RPG market, so it will by definition have a huge effect. The more interesting question, though, is what other people will do in response.
Even compared to 3rd edition D&D, this seems like much more of a huge, corporately-organized development project that leverages WotC's size as a company -- whereas D&D3, while big and well-playtested, was more the brainchild of three designers. I think the intent behind this is make a unique niche for D&D4, discouraging publishers from going head-to-head with it via close OGL products like EverQuest and Conan were for D&D3. If successful, there would be the fraction who make supplements and adventures for it, and those who make distinctly different games. I'm not sure if this will work, but I think at least there will be less cleaving to the system of D&D4 than there was of D&D3.
Ryan Dancey has been making a number of industry predictions on his blog. Of particular note is his call to "Redefine The Hobby" to be "storytelling games" rather than roleplaying games. I would take all this with a big grain of salt, since he is trying to sell "Ryan Dancey's Storyteller's Guide to D20 Games". Still, it is interesting.
He posted on theRPGsite post on industry scale, as part of a general thread called "Regarding Ryan Dancey's Claims About Story and RPGs". He guessed the indie RPG market is equivalent to ten publishers selling 2000 units per year. That's seems potentially optimistic, but not outrageous. For comparison, here's Fred Hick's latest sales to date (2231 for SotC and 1053 for DRYH) and Chad Underkoffler's "Back of Envelope Numbers" for sales, and Vincent Baker's lumpley games in 2006 (700 copies of DitV).
I think that indie storytelling games will continue to grow incrementally, possibly joined by a few non-indie games of similar style. However, I don't think they're going to be a major force in the market -- and I don't think that D&D4 is particularly going to change the state of things either way. Still, there is interesting reading on his blog about related topics.