An e-book is basically an electronic book. You download an e-book reader (Microsoft and Adobe are the big two) and you pay for and download files of the book you want. You then use the reader to display the e-book so you can read it. Barnes and Noble has a really big e-book selection. There are also handheld e-book readers (about thrice the size of a palm pilot), but they are few and far between, maybe not even being sold any longer.
Ylesia will most likely be available in the paperback version of Destiny's Way, just as Recovery was included in the paperback version of Star by Star.