HTML 5 is the next major revision of HTML--the core language for web design.

Why do we need an upgrade to HTML?
The goal of HTML 5 is to reduce the need for proprietary plugin-based technologies like Flash and Sliverlight (rich internet application (RIA)). The complaints against such plugins are that they have longterm security flaws, cause a drag on processing power which in turn reduces battery life for mobile technologies and more.

What would be one example of a real world and everyday benefit for HTML 5
Besides the complaints about battery life being drained by plugins such as Flash and the long term security flaws. One of the very exciting benefits for HTML 5 would be the ability to embed video natively on a webpage and apply customization to the native video element. Also, HTML5 introduces a number of new elements  and attributes that will help to modernize this core coding language and provide lots of very exciting new functionality, without having to rely on Flash. Some of these elements include: <audio> and <video> and <canvas>.

There are lots of other improvements in the works. For a complete list of improvements please see the WWC: http://dev.w3.org/html5/spec/Overview.html