It's a new, dedicated app from Facebook that may seem redundant in the context of Facebook's billion-dollar purchase of Instagram, but makes perfect sense when you consider the big picture.
Instagram has around 60 million users who apply some retro filter to a photo, then upload that one photo to Instagram, and maybe share a link on other services like Facebook and Twitter. Facebook has over 900 million active users with a collective photo library that drastically dwarfs the Library of Congress and Flickr many, many times over. Users often create albums with which to organize multiple photos of events, and they create virtual tons and tons of them.
A common complaint about Facebook's mobile app is that it can't upload multiple photos at once—this is a key feature of Facebook Camera (and many third-party apps that have come before it). Its other key feature is applying filters, a trend which Instagram and others started. Now, at least 840 million Facebook users don't need to care about Instagram in order to do the trendy photo thing to multiple photos at a time.
Top that all off with community requests and Facebook's official statement that Instagram will remain an independent service for the indefinite future, and it makes perfect sense for Facebook to release its own stand-alone camera app to satisfy what were probably two of its largest photo-releated feature requests. [Update]: Plus, as Dan Frommer points out, Facebook's acquisition of Instagram isn't a done deal yet, and might not be for a while.
But let's not kid ourselves: if the deal goes through, Facebook will most likely retire the Instagram brand somewhere down the road and ask users to fold their photos over into a Facebook account (or take their ball home and sulk), so please don't feign surprise when it happens. That day is probably a long way away, though, and users have been asking for the aforementioned features for a long time.
Smartphone app users want polished tools that tackle fewer jobs but do them better. Photos may be one of Facebook's most popular features (if not the), but you could argue that adding all these new features into the main Facebook app would have crafted it up too much. That desire for simple, streamlined tools that do one or two things well is precisely the call Facebook Camera answers.