You'll need a localhost LAMP or XAMPP environment to follow along with the examples here. If you don't have one set up, I recommend using the Acquia Stack Drupal Installer: http://acquia.com/downloads.
Once your testing environment is configured, download Drupal 7: http://drupal.org/drupal-7.0-alpha6.
Save the installer to your localhost Drupal /sites folder and extract it. Set up your MySQL database using your preferred method. Note to developers: D7's new database abstraction layer will theoretically support multiple database types including SQLite, PostgreSQL, MSSQL and Oracle. So if you are running Oracle you may be able to use D7.
Now load the installer page in your browser (note I renamed my extracted folder to drupal7): http://localhost:8082/drupal7/install.php. The install process is about the same as D6 - you're still going to need to copy your /sites/default/default.settings.php file and re-name it to settings.php. Also make sure to create your /files folder. Make sure the file has write permissions for the install process. Once you do this and have your db created, it's time to run the installer.
One immediate difference with the installer is that D7 now offers you a Standard or Minimal install profile. Standard will install D7 with common Drupal functionality and features that you are familiar with. Minimal is the choice for developers who want only the core Drupal functionality enabled. I'll leave it set for Standard profile.
Navigate through the installer screens choosing language; and adding your database information.
With D7 installed what are the immediate noticeable enhancements? The overall look and feel of the administrative interface now uses overlay windows to present links to sections and content. Navigation in the admin interface now runs horizontally along the top of the site. Directly under the toolbar navigation is a shortcut link navigation. You can customize this by adding your own shortcuts pointing to various admin functionality.
In the toolbar, Content points to your content lists. Structure contains links to Blocks, Content types, Menus and Taxonomy. CCK is now built into Drupal 7 so you can create custom content types and manage custom fields without having to install modules. If you want to restore the user interface to look more like D6 you can do this by disabling the Overlay module or tweaking role permissions for the Overlay module.
Two content types are enabled with Drupal 7 core. Article replaces the D6 Story type. Basic Page replaces the D6 Page type. Developers hope these more accurate names will help new Drupal users understand how to add content easily to their site.
Themes are now under the Appearance section. There are 3 new themes: Bartik, Seven and Stark. Bartik is enabled during the install. Garland makes a return from Drupal 6. You can also set your Administration theme easily from the same main Appearance screen.
A huge enhancement is the ability to install contributed themes directly from the Appearance admin page. Clicking on the Install new theme link will load a screen where you can paste in the path to the theme's tar.gz file or upload directly from your desktop.
Users and Permissions
People loads User administration and Permissions. In D7, users can only edit and delete their own content by default. You can bypass this by checking the Bypass content access control in Node permissions. Each time you add a custom field, there are no longer specific permission checkboxes for those fields that you need to check by default. Field permissions will most likely be handled in D7 using a contributed module such as Field Permissions (http://drupal.org/project/field_permissions) which is still being developed.
Modules loads the module administration screen. You can run cron and check for updates via links directly from this overlay. Like the Install new theme feature you can use the Install new module link to run your contributed module installs directly from their Drupal project page or uploaded from your desktop.
The Configuration overlay also enhances organization. People, Content Authoring, Media, Search and Metadata, Regional and Language, System, User Interface, Development and Web Services provide easy jumps to site configuration.
Reports contains a new feature called Field list. This presents a reference listing of all your custom and core content type fields.
Overall Drupal 7 is an exciting release due to significant improvements in user and admin interface. The Overlay windows are impressive. The new sectioned navigation will make it easier for users and admins to move around within the site and the new module installer functionality is definitely something to rave about. There are a lot more enhancements and changes. See if you can locate them and attach a comment to this post telling us what you've found and what you think of D7.