To me, telepresence is high-enough definition video conferencing that it feels like the person you're seeing video of is actually in the room. Cisco's Telepresence does that, and so does HP's Halo. To my mind, Halo has two advantages over Cisco; one, the camera is hidden so it doesn't break the illusion every time you look up and two, you can connect from one Halo room to another Halo room anywhere in the world. That's because HP provides the 'dialtone' for the Halo network. Cisco runs Telepresence over your enterprise network, and you can only conference to other rooms in your own network.
That's a limitation and Cisco has tried tying up with partners like BT Global Services and Tandberg to deliver interoperability; that as much as the prospect of what Ovum estimates as a 65% combine market share may be behind Cisco's plan to buy Tandberg. Being able to connect from a Telepresence room in your own company to a room at a partner or customer would be a big step forward; being able to mix and match connections to video conferencing on different screens all the way down to desktop users would change the game. The question there is whether you can stay in high definition when you do that; if you're back to postage-stamp video, it's no longer like being there and you can't pretend you get the same experience. Tandberg has the interoperability between systems, but not always at high definition.
You need enormous amounts of bandwidth to do high-definition telepresence, which is why Cisco cares . What you get out of it is the same 'bandwidth' between people in the meeting as you do in a real meeting; tone of voice, eye contact, a quiet conversation with someone at your end of the table in the other location while the main conversation is going on (spatialised audio is very powerful, but it needs a dedicated setup so far).
Richard Mahoney at Ovum says the Cisco Tandberg deal only matters if it concentrates on delivering services rather than shifting video conferencing equipment. Cisco has been showing off a home version of Telepresence that would work over a 6Mbps cable connection; that's a service it needs some help rolling out. But for my money, if it delivers high-definition interconnection between multiple systems the deal could really change the video conferencing experience.