When a plug-in freezes or crashes, its contents are replaced with an error message informing the user of the issue while the browser itself will continue running. The new capability should significantly improve the browser's stability and is a first step towards full multi-process browsing, where not only plug-ins but tabs themselves are sandboxed into separate processes -- something that has been touted in Google's Chrome from the start.
For now Firefox's crash protection will work on Windows and Linux only, though; it won't reach Mac OS X until Firefox 4 ships. Firefox 3.6.4 also fixed seven security vulnerabilities, four of them rated as critical and two moderate, so there's even more reason to upgrade. You can read the full release notes here.