Since the start, the 770 has used .debs for package management. With the 2006 firmware, there is a nice GUI tool for browsing repositories. Unfortunately, there is no single repository for all working applications (although there is a list on the maemo.org wiki), so you end up having to add a repository for almost every application you install.
The only real advantage of using the repositories over just grabbing the .debs from the Maemo wiki is that it handles dependency resolution for you.
Another advantage of the new firmware is that it provides a simple mechanism for gaining root access; there is a gainroot script installed by default that the user can run using sudo. This means you don’t need to jump through hoops to be able to do things that require root access, making it a lot more hacker-friendly.