Type the name of an artist and YouTube generates a playlist that includes music from the artist you've entered and from similar artists. For example, I entered "Bjork" and YouTube added music from Radiohead, Air, Massive Attack and Aphex Twin. After the playlist is generated, you can remove some of the songs, add new songs, save the playlist or watch all the videos.
Playlists are far from perfect: there are too many songs from the same artists, there are few obscure songs and the transition between songs is not always smooth. YouTube Music Discovery Project won't replace Pandora or Last.fm radios, but it's a simple way to find music from your favorite artists and to discover similar artists.
"A search for Pearl Jam results in a playlist stocked with Eddie Vedder & Co., plus videos by fellow Seattle grunge all-stars like Nirvana and Soundgarden and ’90s rockers like Smashing Pumpkins and Black Crowes. Not much for discovery as the vast majority of Pearl Jam fans are already well aware of these other bands, but the Pearl Jam list might introduce fans to the handful of obscure Screaming Trees music videos that YouTube suggests," notices Rolling Stone.
A similar feature is available for the existing YouTube playlists: click on "Recommend videos based on this playlist" and YouTube suggests 8 related videos.