Start by describing what it is in a single, full paragraph. At this point, it doesn't matter how long your description is, or how spiffy it sounds. Just try to keep it to one paragraph, two at the most. Then, start compressing it. Find ideas that really aren't important right off the bat and cut them. Find ideas that are similar and combine them into smaller sentences.
"Snipshot is a web-based application. Users can upload image files, or submit a link to another picture on the web. Uploaded images can resized, cropped, or enhanced. Basic attributes can be modified, like brightness, saturation, and hue. Images can be saved to your hard disk in 6 different formats. They can be published to Flikr or Webshots."
Combine sentences 3 and 4. Sum it up as "Uploaded images can be edited." Then combine with sentence 2 to say "You can upload or link images and then edit them." Cut sentences 5 and 6 because they aren't important right now.
Then you have "Snipshot is a web-based application. You can upload or link images and then edit them."
They compress it even further: "Edit pictures online."
The para you asked is taken from juwo.com:
A "Swiss Army knife" piece of software that gives more power to consumers to structure snippets of audio, video and text as a bullet list, to more easily index and annotate them, and to share the lists with others. Its benefits extend to multimedia as related to more enriching broadcasts, collaboration and organizing.
Also eliminate the part about giving more power to consumers. When I visit your website, I'm not thinking of myself as "consumers." I'm just a guy who wants to get something done and wondering if maybe you can help.
Take the rest of that sentence and separate it into one sentence for each idea.
What I am struggling with is, I am doing all the stuff - but people (at least on YC) dont get it:
1) links to 3 screenshots
2) simple cartoon diagrams with an analogy to shopping lists
3) a list of "what is in it for me" i.e. how juwo can help you.
4) links to demos for each of the above in 3).
Isnt all this good enough?
IMHO juwo is different and harder to encapsulate.
Look at the WriteWith.com site: http://writewith.com/ One sentence explains it and the screenshot is nice too. But after the first sentence, it has a little list of things a user can do, "upload documents, share with other people, chat, assign tasks, and track everybody's actions with a comprehensive history." And you can figure out wtf it does in just two sentences...amazing huh?