CarPlay is a new system that makes it easier to use your iPhone in the car. An iPhone is thus required to make it work, iPhone 5 that is.
CarPlay will make some of your app-icons visible on the car's infotainment screen and when you touch the infotainment's screen, the iPhone will be informed, and react. Some obvious apps for CarPlay will be the usual infotainment apps like navigation, handsfree phone use and media player. There will also be email, sms and twitter apps. I would expect driver's journals to be a killer app for CarPlay use, because the driving data will be so much more reliable thanks to CarPlay.
Since it's for cars where hands will usually be on the steering wheel, Siri will play a big part in CarPlay. You'll catch Siri's attention through the voice command button on your steering wheel. Perhaps they'll call it the Siri-button.
CarPlay is likely to give Apple a bigger part in their users' lives. That means a lot more user data to collect, which will further improve Apple's products, particularly maps I guess. At any rate it will increase the iOS eco-system.
The first lucky car brands to get CarPlay will be Ferrari, Mercedes and Volvo, closely followed by Honda, Hyundai and Jaguar.
Apple isn't alone of course in entering the cars. There is the Open Automotive Alliance (OAA) headed by Google and the operating system is indeed Android. The founding members of the Open Automotive Alliance are Audi, General Motors, Google, Honda, Hyundai and Nvidia.
Put the pieces together i.e. CarPlay and self-driving cars, and you'll soon visualize the future of driving: lay back, enjoy the scenery and listen to some nice music. Like flying first class.