The new bundle is available only to those who are 18 and over who purchase a new Xbox Live Gold contract for $14.99 per month for two years. It is available through the Microsoft brick-and-mortar stores. The offer doesn't have an expiration date, but the fine print says Microsoft may terminate it at any time. (I don't see anything saying this is a U.S. only offer; I've asked if there will be a way to sign up other than by going into a Microsoft Store.)
Update: So it turns out, this is just a pilot program, according to a company spokesperson, designed to determine how Microsoft can best serve its customers. It is U.S. only; no word on when or if it will expand beyond that. And the only way to get the deal is to go into one of Microsoft's 17 16 physical retail stores and redeem it. Perhaps this is just as much a way to try to drum up Microsoft Store business as a way to sell more Xboxes.
One theory: A $99 entry price could make the Xbox more appealing to first-time customers who have balked at paying $300 for an Xbox console/Kinect combination. Microsoft's goal for a while now has been to broaden the Xbox customer base beyond hard core gamers. And it's done an admirable job getting those who don't aren't into first-person shooters to give it a try. According to Microsoft's data, more current Xbox customers are using it for general entertainment purposes than for gaming.
And still another theory -- and none of these theories is exclusive; they all may apply: Microsoft prefers recurring subscription revenue to a one-time payment. It allows the company to continue to have an ongoing relationship with customers, who may be open to purchasing other complementary games, add-ons, etc., each and every month, rather than one time only. (This is just a new piece of hardware with which Microsoft is using the "subsidized by carrier" model. It works with phones and had mixed results with netbooks. Let's see how it does with a gaming console...)