It describes an embedded electronic circuit that allows remote provisioning and management of network information. It means that customers will never have to open an M2M device to replace a SIM. The design was created to ensure interoperability and security.
For example a car manufacturer can use an embedded SIM that can be remotely programmed and connected. First deployments of the new embedded SIM are expected in 2014.
That is not saying that traditional SIM cards are bad. They were designed to be interchangeable. While they are currently successfully used in M2M devices, these pieces of plastic need to be replaced every time a device has to connect to a new network.
To fix this issue, the GSMA has developed a non-removable SIM that can be embedded in a device for the duration of its life, and remotely assigned to a network. This information can be subsequently modified over-the-air, as many times as necessary.