So why does this work? Is Chrome 37 for Linux now being shipped with support for Encrypted Media Extensions, i.e., HTML's built-in DRM, with Netflix relying on EME? Or has something happened with Moonlight to support Netflix DRM? Or what?
Chrome 37+ already had the necessary DRM extentions, but it only worked with a recent version of the NSS library. It was possible to play HTML5 video on Netflix in Linux since then, but you needed to fake your user agent to say you were on Windows.
The reason it works now is that Ubuntu 14.04 (the latest LTS version) has updated to the necessary version of NSS, so Netflix will serve HTML5 video to the standard Chrome user agent on Ubuntu. Netflix just didn't allow it before because the LTS version didn't support it - you had to manually update the NSS library outside of the package manager to make it work. Netflix just didn't want to flip the switch to allow it until it would work on the standard packages on the LTS version.
It seems to work on any Linux distro with the necessary Chrome and NSS versions now without any user agent altering - I'm able to watch Netflix on Arch Linux now with the standard user agent.
Its HTML5 DRM built into Chrome. Its actually worked for ~a month in Chrome for Linux if you just spoofed the user-agent string to Windows, absurdly. The only thing really prompting this announcement is that Netflix is no longer blocking Linux user-agents.
It only works in Chrome at the moment, as Firefox does not support the required DRM.