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The RROD is basically an error code so the techs at MS can figure out what the problem is. If you read the second post of this thread, someone explained what happened.
Basically the first batches of Xbox 360's had terrible quality control and were shipped with faulty soldering. Enough of the xbox came back that they decided they would extend the warranty for up to 3 years on the soldering parts. Mostly would happen because people had their xbox in a confined space like where they're vcrs were and it didn't help the situation.
After the first year, they changed mainboards inside the console and have had 90% less problems, but they still have a 3 year warranty on the 3 rings as it's a very specific problem. Of all the Xboxs that fail, 3RROD is the most common because of user error or the first gen mainboards.
It's nothing to worry about. I bought one when Halo 3 came out (2 years ago?) and got 3RROD about 4 months ago. I sent it back. Was without my xbox for 2 weeks. I got a free month of Xboxlive gold because of it. I still think it's better than PS3, but that's just personal opinion. =)
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