Temporal AA is a way for ATi to allow antialiasing "for free" so to speak, i.e., little or no performance hit. What it does is that it takes different, programmable samples for AA and varies them by frame. As you may know, most MSAA (multisample antialiasing) techniques are based on one sample pattern based on the level (2x, 4x, 6x). What temporal AA does is use a slightly different sample for each frame (2 or 3 samples). Since it changes each frame, it should not be noticeable if your frames/sec is high enough - more on this in the next paragraph. The next result is that you can use regular AA with temporal AA to achieve much greater levels of AA with only the frame rate hit of non-programmable/standard AA.
There are some drawbacks to temporal AA:
* Vsync is required to be on, or should I say, is forced on if you enable temporal AA. For some users, this may be a problem.
* A relatively high frame rate is required to avoid flickering (>= 60 frames/sec). On the flip side, you can set a frame rate threshold. If the frame rate drops below the chosen rate, temporal AA turns itself off.
* It is only present in D3D as of Catalyst 4.6, but it should be available in OpenGL when it is formally released in 4.7. You can activate with 3rd party tools such as Radlinker.
I hope this gives you a good overview of temporal AA. I'm sure I missed a few things, but those are the basics.