An i-name is a short name that looks something like =name. So instead of your OpenId URL, you can type in =name in any OpenId form and it will log you in as usual.
So instead of name.myopenid.com, I'm =name.
There are registrars who sell an i-names for relatively cheap. (There are also free ones.) The i-name points to the broker's lookup service. In their database, your i-name is associated with a unique number that you keep even if you let your name expire.
That entry points to an XRDS document, and that document tells the login form a number of things. Most importantly, it tells it your OpenId URL. It also provides a series of forwarding addresses that look like this:
My favorite is =djacobs/(+contact). It points to a page on my broker's site with a contact form. This contact form knows my e-mail address, and people can use it to e-mail me without finding that address out--like any other contact form. More importantly, the form comes with useful spam-fighting settings, options like "don't let anyone e-mail me without an i-name of their own".
I happen to think i-names are pretty cool and will tend to make everyone settle on one ID. Maybe a good vocabulary will come out of the forwarding syntax, and we can approach a loose Semantic Web using i-names instead of URLs and triples.
Caveat: As of now this is painfully tedious to set up for the average user. Eventually, though, people will see the merit in this approach, and more competition in this market will drive a user-friendly setup.
For now, it's just for hackers.
Or, you could allow your provider to put a persistent cookie on your machine, and (as we've seen from the Firesheep news lately) making it that much more likely your identity will be compromised. (Not to mention if someone steals the cookie for your OpenID provider, the impact is potentially much larger.)
The i-name stuff is just DNS for OpenID providers. It adds another layer of bullshit on top of layers of bullshit that don't need to be there in the first place.
I carry the key to my car. When I want to get in, I press the button on the fob or I open the door with the key. OpenID is like having to make a phone call to someone, tell them I need to get into my car, so they can then press a button that will open my car door. And hopefully they aren't on their lunchbreak.
Security issues are not unique to i-names, and I think the abstraction layer (removing a domain name from your login) is important and useful.
Disagree if you must.