The new mode will allow players to move their own camera around a match, as well as pause, rewind, slow down, and fast forward through the action. Riot Games said:
Coming in the game’s next patch, Spectator Mode gives players the ability to watch their friends’ games in-progress, taking advantage of an AI-driven directed camera and Timeshift controls which allows them to slow down, rewind, and fast forward the action. On top of watching their friends, players will be able to spectate Featured Matches at any time, showcasing high-level competitive players duking it out on the Fields of Justice.
Other games similar to League of Legends, including Heroes of Newerth and Dota 2 (which is still in beta), already have spectator modes, which serve as a popular learning tool for players who want insight on how to play the complicated titles. Some even use the mode to coach their less experienced friends.
Many fans were annoyed by the lack of this feature in LoL. Maybe now players who switched from LoL to one of its competitors will have a reason to come back.
Riot Games also released a video explaining the new feature, posted below.