As far as the service goes it will be available later this year and it will be accesible on the xbox 360 dashboard. Here are the main features via kotaku:
- browse artists & tracks and compile custom playlists
- share those playlists, and other recommendations, with friends via "Party Radio" (you'll also be able to listen in on the same songs/playlists together)
- create your own Last.fm station
- check out artist pages complete with photos, band info and other info like how to find similar artists.
No official release date is out yet and no word on whether last.fm will work when you are playing a game yet either.