Namecoins are a separate implementation of the bitcoin protocol.

It is designed around the ability to use a blockchain to store information about namespaces for domains so once configured, a DNS could route traffic to a specific server.

The extension for these domains are currently .bit but this can be expanded at a later date.

Namecoin uses merged mining. No extra effort is required (the hash is checked against both chains).

More information can be found out at http://namecoin.info

Questions about the protocol are welcome here also.