The 2.43 release could be nicked the "Multi" version; with multi-resolution Meshes, multi-level UV, multi-layer images and multi-pass rendering, to name some highlights.
Much appreciated are the new Mesh Sculpt and Retopo painting tools. Artists using cvs versions have created amazing models with it already. But seven months of development time have resulted in a giant list of features & improvement & fixes, as you can find below.
February 17th, 2007
Sculpt Mode is a new mode for editing Mesh objects. Unlike Edit Mode, the model's shape is manipulated with various brushes, rather than by editing individual vertices, edges, and faces.
(Sculpted Mesh by Giuseppe Canino)
The retopo tools make it easier to completely change the topology of a mesh while preserving the same basic shape. A typical usage of this tool is modifying a mesh to make it more suitable for animation.
Multires meshes store multiple levels of subdivision. In contrast to the Subsurf modifier, any level of subdivision can be edited. These changes are then propagated to all the other subdivision levels.
Modifiers have quickly become a very useful and popular system in Blender. The code for Modifiers was fully refreshed, better integrated and new modifiers were added: Edge Split or UV Project or Displace
You can also read the Tech Paper about the implementation.

Meshes can now have multiple UV and vertex color layers.
Mesh modeling was improved in many areas, worth mentioning here are:
The image painting core has been rewritten, with a number of new options, a dramatic speed improvement, and the ability to save brushes.
Blender now has four efficient ways to procedurally duplicate objects. Face duplicators allow to copy objects on faces, and scale according to face size.
Softbodies have seen a substantial improvement. Better collision and rigidity options allow for a much greater range of effects, even to the point of emulating cloth to some extent.
The fluid simulator now supports several features that produce much better looking simulations, especially for interaction with other objects.
Rigid body physics - the Bullet library - was further improved this release. Now hinges and other constraints can be added.
Rigid body simulations can also be 'baked' to animation curves.

The python API and scripts have both received a lot of attention this release. Some highlights include baked motion data importing and exporting via the MDD format; a new DXF importer that has improved support for DXF features; and a new tool for UV projection.
And a lot of more work has been done... check this page for a listing of all the other features, improvements and fixes in Blender.
In 2.40 the Render Pipeline was improved, introducing tile-based rendering, render layers and an integrated compositor. For true pass render, the code that handles shading itself had to be reconfigured.
Blender's render pipeline supports rendering to UV texturemaps as well. Full Shaded information, Ambient Occlusion, Normals or Texture Colors are supported.
Two point perspective rendering, normal map with tangent support, tangent shading, alpha sub-sample-masked render, material node speedup, ....
Recently several papers have been published on a succesful alternative method for Shadow Buffers, giving the same crispy quality as ray-tracing shadows.
- MultiLayer image read/write
- Flipbook playback for compositing sequences or movie files
- Painting in Image Sequences, or while compositing
- Procedural Images
This node can be used to emulate depth of field using a post-processing method. It can also be used to blur the image in other ways, not necessarily based on 'depth' by connecting something other than a zbuffer.
Four wonderful new nodes for remapping, warping or masking images during compositing.

This series of nodes is meant for special effect shots, when you need options to seperate images in fore/background.
Check the documentation in Wiki or the tutorials.
A new walkcycle system was added, allowing matching of forward walking characters. And to control walkcycles more precisely, the walk can be deformed using a curve path.
Proxy Objects allow to make (parts of) Library-referenced data local. This allows for example an animator to make a local 'copy' of the handler bones of a character, without having the actual rig duplicated.

There have been improvements in armature editing and the IPO, Action and NLA editors. Ghost and path drawing is now more customisable, and transform limiting constraints were added.
While transforming (translate, rotate, scale) vertices, you now can precisely snap a selection to other vertices.
Blenders sequencer (non linear editor) has had a number of nice additions including new effect strips such as a color generator, transform strips, and speed control for things like retiming. There have also been a number of usability enhancements.
