An ereader book is exactly what it says - it's an electronic book which replicates the paper books we all know and love in a digital format that lets you read it on an ereader (or other electronic) device. Ereader books can contain text and images (and even video on some of the more tablet-like models. It's this ability to show images which makes the growing number of colour ereaders more desirable.
As the popularity of ereaders has exploded over the last few years, so has the number of reader books that are available. Wkipedia notes that there were over 2 million free books available for download as of August 2009. I'll get some figures, but the guess is that number is now well over 3 million.
One of the main benefits of an ereader book is that it'll never go out of print. Plus of course, space saving is a huge benefit. Within one hand- sized ereader you can potentially hold thousands of ebooks. Accessability is a big factor for ebook fans - an ereader book can be bought or borrowed, and then downloaded and used immediately (provided your ereader is charged up). Looking after the environment also gets a look in - ebooks use no paper or ink, and the creation process for paper books also uses other resources such as water.
There are other benefits too. DRM sometimes can get in the way, but it may be possible to back up ebooks so they can be recovered if lost or damaged. Authors get an easier time because it's cheaper and much easier for them to get involved in self publishing.
Here's a great article spelling out the top 30 benefits that you'll get from using ereader books.