The iLink feature is a proprietary Pioneer scheme for connecting multichannel SACD and DVD-A sources digitally to the amplifier. It currently only applies to the maker's top-of-the-line DVD player and A/V receiver, though.
like jack said, i-link provides for a digital connection.
this is very useful for bass management.
currently, most hi-res players have to connect to the receiver via analog cabling. this was done because the manufacturers were worried about piracy via a regular digital connection. in theory you could make a perfect digital copy.
the problem with analog cabling is that you cannot adjust the bass management very effectively. so you were forced to use some sort of external device (like the outlaw icbm) or you had to live with whatever bass management scheme the player had - most of these were only adequate at best.
with the i-link, you can now have complete control of your bass-management digitally. it offers complete flexibility. it should be noted that most of these digital connections are proprietary. i think denon has something called d-link too.
i've read a couple of reviews on the pioneer i-link and they said it performed flawlessly.