The "content" module is located in src\content, and is the core code needed to render a page using a multi-process sandboxed browser. It includes all the web platform features (i.e. HTML5) and GPU acceleration. It does not include Chrome features, i.e. extensions/autofill/spelling etc. The goal is that any embedder should be able to build a browser by starting with content, and then pick and choose Chrome features.
As the Chromium code has grown, features inevitably hooked into the wrong places, causing layering violations and dependencies that shouldn't exist. It's been hard for developers to figure out what the "best" way is because the APIs (when they existed) and features were together in the same directory. To avoid this happening, and to add a clear separation between the core pieces of the code that render a page using a multi-process browser, consensus was reached to move the core Chrome code into src\content (content not chrome :) ).
As discussed above, content should only have the core code needed to render a page. Chrome features use APIs that are provided by content to filter IPCs and get notified of events that they require. How to Add New Features (without bloating RenderView/RenderViewHost/WebContents) describes how to do this.
As an example, here's a (non-exhaustive) list of features that are Chrome only, and so are not in content. This means that content code shouldn't have to know anything about them, only providing generic APIs that they can be built upon.
Where code interacts with online network services that must be supplied by the vendor, the favored approach is to fully implement that feature outside of the content module. E.g. from the list above Safe Browsing, Translate, Sync and Autofill require various network services to function, and the chrome layer is the natural place to encapsulate that behavior. For those few cases where we need network service using code in the content module in order to implement generic HTML5 features (e.g. the network location service for Geolocation), the embedder must fully define the the endpoint to connect to, typically it might do this by injecting the service URL. We do not want any such policy coded into the content module at all, again to keep it generic.
The diagram above illustrates the layering of the different modules. A module can include code directly from lower modules. However, a module can not include code from a module that is higher than it. This is enforced through DEPS rules. Modules can implement embedder APIs so that modules lower than them can call them. Examples of these APIs are the WebKit API and the content API.
The Content API is how code in content can indirectly call Chrome. Where possible, Chrome features try to hook in by filtering IPCs and listening to events per How to Add New Features (without bloating RenderView/RenderViewHost/WebContents). When there isn't enough context (i.e. callback from WebKit) or when the callback is a one-off, we have a ContentClient interface that the embedder (Chrome) implements. ContentClient is available in all processes. Some processes also have their own callback API as well, i.e. ContentBrowserClient/ContentRendererClient/ContentPluginClient.
The current status is content doesn't depend on chrome at all (see the meta bug and all bugs it depends on). We now have a basic browser built on top of content ("content_shell") that renders pages using content on all platforms. This allow developers working on the web platform and core code to only have to build/test content, instead of all of chrome.
We have a separate target for content's unit tests in content_unittests, and integration tests in content_browsertests.
content is build at a separate dll to speed up the build.
We've created an API around content, similar to our WebKit API. This isolates embedders from content's inner workings, and makes it clear to people working on content which methods are used by embedders.
In parallel, or once this is done, it would also be useful to separate the dependencies of chrome features. As an example, if someone wants to start with content and add spellcheck+translate, they should be able to build without extensions. We need well-defined APIs between features in order to make this possible. Update (3/28/2013): see the BrowserComponents effort.