I've never actually spent any time at Tumblr and didn't realize it was "popular" until this whole "the guy who created it is a certified genius blah blah blah" thing started being hyped in the media in the past few months.
As best I understand, it is a streaming-twitter sort of thing, but that is not actually used for interaction or new content or anything. It is pretty much just used for people to link or post other people's content to in their own stream that other people can view or subscribe to or something.
I guess the best comparison might be "an even shittier Pintrest"... and about as dumb.
The only thing stupider than a company trying to chase a trend that has a clear finite time for relevance is chasing a trend that is only really a hot trend in its own mind.
Apparently they have a bunch of users (well, tens of millions -- nothing absolutely astonishing or anything), so I guess the real purchase here is a mix of "durp durp Tumblr is a hip brand and will rub off on us in the mind of the public" and "we want to market shit to teens with emo hair and tight pants who are about to grow their fist pube".
It reminds me a lot of Dell trying to be cool by buying Alienware, when most people saw Alienware as expensive stupid shit for suckers and Dell didn't see an ounce of "cool" rub off on them for their effort.
Here's a pretty good example of a Tumblr "blog":