If you haven't heard of Project Gutenberg, I sugest you check it out. It's a huge resource of both free and public domain books, digitized for your electronic consumption. It's also a great resource for when you want to know how many times Shakespeare uses the word 'tup' in Othello, for instance. Just search over the whole text.

Anyway, it seems that in order to speed the digitizing of these books, someone scans all the pages and uploads them. The pages are then OCRed, but they still need to be checked. This is where the Distributed Proofreading system comes in. You go and get a page and check it for errors. Once all the pages are checked, it becomes an official e-book. Hooray!