When blogs first became popular, they were known primarily as being sort of online diaries. Usually an individual would update their blog on a daily basis with comments about their lives or other day to day activities. In this way popular blogs were able to gain a fairly large readership of those looking to be entertained. More recently, however, some bloggers began to add a more serious element to their blogs, usually by compiling and sharing news about a particular subject, most commonly politics.
These days, the major political blogs like The Drudge Report have power in almost the same way that traditional media outlets do - they can break stories and change someone's career. What has happened in recent years is that bloggers haven taken on roles traditionally associated with reporters: they are privy to sources and information which they share. Some blogs even have rss feeds like the major news outlets do.
What makes blogs fundamentally different from traditional news outlets, of course, is that they are completely independent in nature. This can be both a good and a bad thing: a blog's rss feed may not have been censored, nor is it subject to any internal pressure with regards to a story, yet at the same time the standards of internal checks and balances are unlikely to be present in most blogs.
One of the more famous instances of blogs becoming involved in a news story was prior to the 2004 election, which 60 minutes was found to have used forged documents in a piece they aired questioning George W. Bush's air force duty. This was a case where blogs were simply more nimble, and able to chase various aspects of the Dan Rather story (as it came to be known after Rather based his reports on the forged documents) in a way that traditional media outlets couldn't.
Because blogs are updated frequently, there is no 'publishing cycle' or delay involved in breaking news. Mere minutes after the 60 Minutes story aired, right-wing blogs all over America were questioning the authenticity of the documents used in the piece. Through their high readership and high amount of links, the blogs were able to quickly put pressure on CBS to prove the authenticity of the documents, something it ultimately couldn't do.
It is often said that blogs are more of a 'people's media' and that there is an inherent democratic power in allowing anyone to effective "broadcast" to the entire world. The problem of course, is that there is no way of verifying information or conjecture that is found on blogs, but with recent events showing the world the ways in which the mainstream media is often wrong and biased, many people have reasonably asserted that blogs are no different.
More generally, blogs represent, finally, one of the long promised for things of the internet age: a democratization of the media, and it certainly looks as if blogs are the first in many dents that will be made in the traditional media's hold over popular public opinion.
The death of traditional network media in the future is likely, whether blogs will take over, or something else entirely, remains to be seen.