Apple announced support for third party keyboards in iOS 8, correcting a long-standing shortcoming of the mobile operating system. The support is part of Extensions, a new feature in iOS 8 that allows features in an app to be extended to other applications.
Apple Senior Vice President Craig Federighi Demonstrates Third party Keyboards at WWDC
Google's Android has long enjoyed the ability to designate a system-wide keyboard replacement, and it's a feature that Apple critics have dinged the company on for years. By supporting this feature, Apple is making it possible for iOS users to enjoy popular third party keyboards like Swype, SwiftKey, fleksy, and others.
Part of the issue with iOS and third party keyboards is the way Apple has iOS locked down. Developers have no access to core system components, and each app is sandboxed, keeping it from communicating with other apps save for Apple-designed features like "Open With."
Extensions fix this, greatly reducing the amount of suck that comes with sandboxing. With keyboard support, for instance, a keyboard maker can release their app, and when users install it, they can choose to give that app access to just the text input. That means developers can provide the functionality users want while core system functions remain protected.
Here are some examples of third party keyboards:
Current SwiftKey App for iOS