The company is apparently telling labels (politely, I’m sure) that it is only interested in selling DRM-free mp3s (meaning, once you download the song, it’s yours for whatever purpose you see fit, no more restrictions like you can burn only X amount of times or you can only have it reside on X computers, etc.). The second difference is that Amazon seems interested in offering variable pricing.
I have not used iTunes for quite a while so I cannot compare, but if Amazon plays their cards right then this could prove extremely successful. Although, I’d still like to see higher bitrates available. I think we’ve outgrown 128Kbps and 192Kbps long ago.