Cover Flow is a view that according to Steve Jobs lets you "rediscover your albums and your music." I've played with Cover Flow quite a bit and it does seems to help see your music as part of an album again.
To see Cover Flow view for your music library, click on the rightmost View button on the right side of the toolbar. iTunes has downloaded all the album covers that it can find, and you are presented with a floating stack of album covers that you can browse through by using the left and right arrow keys or using the horizontal scroll bar.
Note: iTunes can't find album covers for every album that exists, only albums that are for sale in the iTunes Store. If you have albums from small independent labels or other non-mainstream sources, all you will see is a blank cover.
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