The Blender Game Engine is a component of Blender, a free and open-source comprehensive 3D production suite, used for making real-time interactive content. The game engine was written from scratch in C++ as a mostly independent component, and includes support for features such as Python scripting and OpenAL 3D sound.
The BGE is actually quite good - the advantages of being easy to code in and having possibly the best workflow in a 3D game enine far outweigh the fact that it isn't extremely fast or powerful. The fact that it is free and open-source also makes up for any lacks in its capability.
2/14/11 EDIT: @AndrewIsGreen - The screenshots are fooling you. Check out the newest images uploaded.