The Shatter jailbreak uses the bootrom exploit discovered by posixninja and pod2g. Their exploit allows for unsigned code execution to create the first jailbreak that uses an exploit of the SSL8930, Apple's A4 processor, for the tethered jailbreaking of the most current iOS devices: iPhone 4, iPod Touch 4G and iPad, which all use the A4 processor.
This vulnerability is the same one that geohot–who has contributed immensely to the jb community with his discoveries for the iPhone and PlayStation 3–found a while back.
MuscleNerd of the Dev-Team has said via Twitter that the new exploit does work on the current devices, including those running on iOS4.1, such as the iPod 4G:
However, it's important to know that not everything has been made publicly available, so those waiting to update to 4.1 may want to wait a bit longer as everything is still being worked on to take it to a release-worthy quality. The good news is that this exploit will be effective until the devices' hardware changes, which likely won't be anytime soon since the A4 chip was just introduced this year.