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.
Multires can be used with Sculpt Mode or Edit Mode to quickly make large changes to a model by editing on a lower level, and then returning to the highest level, where the changes will be incorporated automatically. Multires is also useful for improving editing speeds; the mesh can be displayed in the 3D View with a low polygon count, then rendered on the highest subdivision level with all details intact.

Multires has a separate panel in the Edit Buttons.