If you do not have your Xbox 360 connected to Xbox Live, which is a distinct possibility if recent user numbers are to be believed, then you probably have no idea what NXE, avatars, and all this crazy stuff is. However, that is set to change, as Microsoft are now including the NXE update in all of their new games coming down the line.
The first games to have the mandatory update included on-disc will be Tom Clancy: H.A.W.X, and MLB: 2K9, Both of these games will not let you play them unless you accept the dashboard update that appears when you put in the disc into you 360.
If you held of this long, then saying goodbye to your old blade interface will be hard. Stay strong!