If and when content has been flagged by several users, it will be sent to the Abuse Prevention Team to determine if an adult content setting is necessary. Both the "Explicit Adult Content" and "Offensive Content" settings will affect filtered search results (see below), but only the "Explicit Adult" setting will result in restricted viewing for those under the age of 18.
Any content flagged as "Hate Speech," "Illegal Activity," or "Nude Images of Minors" will direct the user to the Abuse Reporting System where he/she will be asked to fill out a report including the URL of the content. These instances will be handled in the same manner as always.
So basically if you have an LJ account and are over eighteen/are capable of lying about your age, absolutely nothing is changing for you. It should be noted, however, that Livejournal's timing on this is nothing short of horrifically bad.
That is my sole sounding off.