Polymorph is a non-toxic, biodegradable polyester with a low melting temperature of about 60°C (140°F). Prototype plastic parts can be made by simply heating the plastic beads in hot water until they turn clear and then kneading them together and shaping by hand. When it cools it becomes a nylon-like white plastic. Polymorph can be re-used by simply re-heating and re-shaping. Plastic beads are supplied in a heat-sealed plastic bag to prevent spillage during transport.
So what do you do with it? Robotics, small-parts prototyping, arts/crafts, there's almost no end to what you can do with this stuff. We had a blast playing with it here at SparkFun. Try embedding LEDs into it for a cool diffuse glow effect.
Note: Although Polymorph melts at around 60°C (140°F), it is more workable at hotter temperatures, like around 180-200°F.