Okay, I should've known from the beginning because it was an AOL service, but I try to be as little biased as possible. After all, AOL did manage to impress me quite a bit with their features with AOL Music (videos) as shown on the site. It's almost depressing, because it really is a great idea, and has great music.
Taking it from the top, AOL Radio is exactly what it sounds like: Internet Radio by AOL (for both AOL and non-AOL subscribers). It has a decent selection of stations, including select XM stations and it's own brand of stations. It has everything from your usual selection of country, rock, christian, pop, jazz, r&b, etc. What really impressed me the first time I used it was the selection of music from it's Top Country station. I was beyond impressed, it had the best country artists, the quality is great (they're close to CD Quality, much better than FM), with almost no noticeable buffering. Admittedly the first time I used it was while trying out the AOL 9.0 VR, and it worked great. Also, my biggest gripe with regular radio is the barrage of audio ads. With AOL, they display an image ad to the right of the radio instead, meaning it doesn't disrupt the music. The most ads you really get is a 5 second AOL Radio ad approximately every 10 songs (30 to 40 minutes). That was a very non-intrusive way to provide advertisement without getting in the way of the service.
The problems came after trying it outside of AOL. It doesn't work with Firefox, which was it's main killing point (there is no excuse for cutting out Firefox when it has such a large market share around the world). They're excuse? There is a bug with Java and Firefox interacting with Firefox. The sad news, is that bug has been there since Firefox 1.5 and AOL never fixed it. But that's okay, it should be usable with Internet Explorer right? Well, sometimes anyways. It seems it's been having some problems lately connecting, and will sometimes just present an unable to connect error (variant of your browser of course). Server problems?
I really, really like AOL Radio. It's one of the only Internet Radio stations I want to use, but cant because of their inability to fix the bugs and being able to actually get it started. It's great inside of AOL, but with AOL's userbase rapidly declining, they need to make their services more open to third party software and browsers, especially since they want to become more of a content provider (than ISP) such as Google and Yahoo. They have some great services, but they need to work out the kinks to really let them become more accessible and take off.