The goal of stories, from a business perspective, is to take down Facebook's newsfeed. Here's how The Verge describes it:
[It's] a rolling compilation of snaps from the last 24 hours that your friends can see. You create your Story as you go about your day by tapping “My Story” above the friends you want to send a snap to. Or, you can tap a new shortcut button in the app's camera screen to instantly post a snap to your Story. But unlike conventional snaps, Stories don't disappear in a puff of ephemeral smoke after you've watched them. You can watch a friend’s (or your own) Story over and over.
Each Story is the sum of all the snaps you’ve added over the last 24 hours, which means its size is always fluctuating. What doesn’t change is that every piece of the Story is less than a day old, so viewing one might be the fastest way to see what a friend's been up to. Snapchat may not look much like Facebook, but with Stories, the company is taking its first steps toward competing with Facebook’s most important product: News Feed.
Stories, one of Snapchat’s most visible feature additions in its two-year lifespan, was first conceived as a way to address perhaps the most common request from users: a way to send a snap to your entire friends list. Spiegel and his team thought that a “Send All” button could destroy Snapchat, and instead sought a more passive means of sharing an image or video with everyone you know. Over the next year they built Stories, which live inside Snapchat’s “My Friends” page — one of just four screens in the entire app. The final result recalls the early days of Facebook, where the quickest way to catch up with a friend was to visit their profile
TechCrunch has some more details:
In terms of the mechanics of how the feature actually works, you take a Snapchat photo or video the way you normally would for sharing with specific friends, and then you tap a new icon at the bottom that looks like a stack of pages with a star in front. This brings up a dialog that asks if you’d like to “Add to Your Story,” describing what that entails. There’s an option to dismiss these notices forever once you get the concept, too. You can also choose whether to make your Stories visible only to your approved friends list (selected by default), or to everyone.
From Snapchat itself:
We’re introducing Snapchat Stories. A totally new way to share your day with friends – or everyone. It’s fun and ephemeral, just like Snapchat.
Snapchat Stories add Snaps together to create a narrative. When you add a Snap to your Story it lives for 24 hours before it disappears, making room for the new. Your Story always plays forward, because it makes sense to share moments in the order you experience them.
Your Story never ends and it’s always changing. The end of your Story today is the beginning of your Story tomorrow. And each Snap in your Story includes a list of everyone who views it.
Playing with Stories is the best way to understand it. So for the first time ever, we’re releasing an update simultaneously on iOS and Android. We hope you love it as much as we do.
Snapchat also made a series of snazzy launch video to show how ALL the cool kids are using Snapchat stories:
Is this a social media game changer?