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Emacs 21 features a thorough rewrite of the display engine. The new display engine supports variable-size fonts, images, and can play sounds on platforms which support that. As a result, the visual appearance of Emacs, when it runs on a windowed display, is much more reminiscent of modern GUI programs, and includes 3D widgets (used for the mode line and the scroll bars), a configurable and extensible toolbar, tooltips (a.k.a. balloon help), and other niceties.
In addition, Emacs 21 supports faces on text-only terminals. This means
that you can now have colors when you run Emacs on a GNU/Linux console
and on xterm with emacs -nw.
Consult the Emacs NEWS.21 file for the full list of changes in Emacs 21.