Inter-App Audio was first introduced in iOS 7. The idea behind this technology is pretty similar to the concept of VST/AU plugins for Mac/PC. This technology allows to stream music between apps.
You need the host app – your DAW and plugin apps, that can be virtual instruments or audio effects. Host controls plugins with midi messages and receives audio signal from the plugin. Some apps like Amplitube (all versions), Magellan synth, Nave, Alchemy mobile and few others already updated for Inter-App Audio compatibility.
Of course streaming audio between apps is not something new in iOS, there’s Audiobus and less popular but even more powerful Jack. But as Apple engineers are able to change core features of iOS Inter-App audio looks like easier-to-use and I’m sure that the adoption of music apps to this technology would be faster then what we’ve seen with Audiobus.