Sorry to sound silly, but what's RFID?
its an emerging technology, no reason to sound silly asking about it. basically rfid are tiny computer chips that have information stored on them. when a reader passes over that chip, the reader will try to read the information on it. the paypass credit card machines that you see use this technology, their is a tiny chip in the credit card that is read and the payment is made the same as swiping the card. shipping companies and warehouses are starting to use this technology because it is better than just a barcode scanner.
We are discussing ways that this tech could be used in various application at wdw and other disney parks. I dropped a reply on eddie's forum about alot of what can be done, I am not going to repeat it word for word. But basically what we see happening is that either the key to the world card or a bracelet will have a rfid chip in it. now all of your information will not be on that chip, but rather an unique number that will correspond with a profile you would have setup.
So what can be done is that when you or your kids see a character, your chip will be read either by the CM spotting or the character themselves. they will get your name and maybe age, there could also be an alert if it is your birthday or you are on a special trip at wdw. so the end result is that the character can address you or your kids by name, they can use other information to make the interaction more personal.
another use is that photopass photographers can take your picture and have them tagged to your profile, so you can order the pictures at a kiosks/shop or on your smartphone.
beyond those two applications is where we all start to go off on our own blue sky dreams. i can see disney giving you alerts when you enter the park (rfid chip would be read when you go through the turnstile); these alerts can be for fastpass, events, sales/promotions, and or dinning reservations.
now there are going to be a few many people that are going to be concerning about disney tracking them as they walk through the parks, and it is understandable. disney could use that information to build a profile on your shopping, eating, and ride habits. it could be for your benefit, but it will be 100% for disney's. I am willing to bet a 7 night stay at the gf that when disney does roll this out, that they will let guests opt out. really it shouldn't bother you but this kind of tracking can bother some people.