The problem is light leaking from around the bezel and into the display area, causing a patchy display.
Here's is a photo posted by NiqueXyZ on the Apple support forum which shows what the problem looks like:
Almost all displays suffer from some level of light leakage, but there are acceptable levels, and unacceptable levels, and the image above certainly falls into the unacceptable category.
Another problem, which may or may not be linked to the light leak, is yellow patches on the screen.
Similar problems were reported with the iPhone 4 shortly after its release, and Apple put this down to the fact that the screen bonding material hadn't dried out yet.
No word from Apple yet on the cause of this problem.