Yafray is an open source, high quality photorealistic render system, as being developed on www.yafray.org. With the 2.32 Blender release, the two programs now will closely cooperate.
In the main Render buttons of Blender (F10), you now can choose for the Yafray renderer as well, using a dropdown menu in the "Render" Panel.
Yafray rendering currently works by exporting an intermediate xml file to a temporary directory. Yafray should be installed properly first. Windows users should be able to export immediately, other platforms first need to set the export directory in the Blender user-default section, Windows user can set this export directory too, but is not needed.
After rendering, the resulting image is loaded back into Blender. This means that for the user it is just press F12 and wait for the result as if it were made by blender, this also works for animations.
Materials are exported using a new Blender shader which emulates most of Blender's material functionality, including texture mapping, some procedurals and raytracing settings. Some things need a bit of additional tweaking from the user, like bump mapping levels and raytracing settings.
See this link for the current supported Blender features in yafray.
Light is yet another thing that needs tweaking. Light power levels work quite different in Yafray, so the user has to adjust it to get the desired lighting level in Yafray, Blender's 'sphere' mode probably needs the least amount of tweaking.
Spots and arealights (quad) are also used as emmiters for photons. But these are global photons, not old photonlight, so no (direct) caustics from point lights supported yet.
The pathlight ('Full' option in GI menu) does support caustics from GI (indirect illumination, lights reflecting of other objects), sky and arealights.
For global illumination there is a new panel where you can setup the usual skydome method (hemilight), full GI (pathlight) and also cache mode and photons (globalphotonlight).
While developing this there were a lot of path problems. Most of them are solved now, but some could possibly still experience some problems on win32 or OS X.
Please bear in mind this is still for beta test mostly, awaiting feedback for further improvements. Yafray now is offered as download from www.blender3d.org as well.