Embargoes work something like this. Let's say that Bungie is hard at work developing My Little Pony: Friendship is Magic Online, and the company wants to reveal a new piece of information on August 9th. The company sends a lot of different press outlets a release with all of the information on August 2nd, mentioning exactly when the embargo lifts. So on August 9th, everyone can cover it at the same time!
It sounds like a great way to ensure that the press knows things in advance and that every big revelation is nicely coordinated across all media. In practice, though, it's something less than beneficial due to failures to communicate and the very nature of the beast. Giving more time between the information and release just means more space for things to go wrong.