You pay ~$60 for the year, if memory serves. Then you get to play any game on the service for free.
Any game you really liked, you can buy to add to your library whenever. But you dont feel bad about trying a game you arent sure you would enjoy, and you can also just burn an hour playing a game you know you would hate, just for shits and giggles.
Honestly its the smartest thing xbox has done in a while.