It is, in part, a reaction to the ugliness of suburbia wraught by seperating uses and designing communities around cars instead of people. Who in the United States hasn't driven down an arterial street full of strip malls? When times are good, they end up looking like Denver's Colorado Boulevard. When times are bad, they end up looking like Denver's Colfax Avenue. Throw in the sterile office parks that typify metropolitan Denver's Denver Tech Center (and similar office parks in the route 36 corridor), and the suburban tract homes built from the 1960s to 1980s, and you have a pretty complete picture of what New Urbanism is a reaction against. Environmentalists like it because it counteracts sprawl and encourages walking and public transportation useage.
I first became aware of the movement when I was living in Buffalo, New York in the early 1990s, where it was a hot topic of conversation for the local historic preservation group. They were the only people with practical ideas for addressing the woes of a city that had seen its population dwindle, a large swath of the East Side of the city abandoned by traditional merchants and turned into a dangerous ghetto (this group of neighborhoods was home to a very large share of all murders in the metropolitan area), and its downtown stagnate.
Important principles of the movement include encouraging infill development (i.e. on vacant land or by renovating property in existing urban areas), encouraging walkable space and transit oriented development, permitting mixed use development -- like storefronts with offices or apartments above them, encouraging mixed income housing developments, favoring traffic systems that keep people connected rather than isolating them in cul-de-sacs, building large common parks instead of large individual yards, permitting high density housing, and marginalizing parking, for example, to alley ways in residential neighborhoods.
Denver is a major test bed of the new urbanism movement, where it has been a great success. Its Lowry and Stapleton developments, both built on abandoned airfields, incorporate New Urbanist concepts, indeed, Stapleton is one of the most purely new urbanist developments in the nation. Denver's zoning codes encourage renovation and have been changed to allow development of otherwise worthless small lots. Denver's Sixteenth Street Mall, a pedestrian walkway going right through downtown with a free shuttle bus, makes the city walkable. Denver's Old Elitch Gardens development, its successful effort to turn its once skid row Lodo neighborhood into a vibrant center of bars and lofts, its creation of a new "Central Platte Valley" neighborhood adjacent to downtown near an old railyard, its transformation of the Golden Triangle into a high end, multiple family building residential neighborhood, its revitalization (some would call it gentrification) of the 32nd and Lowell area in Northwest Denver, its transformation of a neighborhood of rundown small, single story 1950s frame houses into the prestitigous high end townhome dominated Cherry Creek neighborhood, and the active pop top and scrape off activity throughout the city's healthier neighborhoods, all attest to the influence of New Urbanism in the city, largely under the influence of Denver Mayor Wellington Webb.
Denver Mayor Hickenlooper is continuing that legacy, for example, by dealing with the City's homeless problem most importantly by committing the city to restoring its supply of "single occupancy hotels" (less charitably called flop houses) so that low income single people can afford to sleep in a room, instead of on the street. Also on deck is a conversion of the Gates Rubber factory site into a major new mixed use, transit oriented development, and the passage of FasTracks, a plan to greatly expand the city's urban rail system.
It isn't just Denver proper that has been influenced by the movement either. Denver is one of the only metropolitan areas in the country where new suburban development is at urban residential densities.
A final piece of the puzzle is about to come into play. The city is coming close to adopting a major overhaul of its zoning code which will likely be more "form oriented". To quote the August 2005 edition of the Washington Park Profile (a neighborhood paper not available on line) at page 15:
This alterntive to coventional zoning supports mixed-use neighborhoods by looking more closely at size, form and placement of buildings and parking, with less reliance on land use (residential/commercial) or density (units/acre). There are still regulations affecting building heights, parking and other issues, but there is more flexibility for landowners to adjust to market demand, as long as the building form fits the established community vision for that area.
Another likely change will be to ease parking requirements on Colfax Avenue, where those requirements have essentially mandated a strip mall approach because underground parking isn't economically viable.
This post doesn't really explain why New Urbanism is a good thing (and it is, in my opinion), or get into the details of how it works, but it is an introduction to the idea and enough to digest in one blog post.