The update means that Kinect owners now have the ability to flick through their video content by using just their hands or their voice. In other words, they'll get controller-free navigation of thousands of movies and TV shows on Netflix.
The update allows users to select movies and TV shows recommended by Netflix, as well as play, pause, fast forward, and rewind using gestures or voice. Kinect support also adds a new exclusive recommendation channel which provides suggestions for movies or TV shows based on past viewing habits.
Unfortunately, it appears that Kinect cannot be used for accessing the Netflix instant queue: for that the user will have to go back to their controller. This is rather disappointing because it means the Netflix app cannot be used exclusively with Kinect, and rather defeats the purpose. We think Microsoft and Netflix should have worked a bit harder on the update before pushing it out: it would be much better if every menu could be accessed using gestures and voice, making the Xbox 360 controller completely optional.