At the danger of getting things wrong, here's a short recap of what's been going on. Edge-IT, a company acquired by Mandriva in 2004, liquidated not too long ago, and most of its employees have either been laid off or left on their own accord, meaning most people working on the distribution are now gone.
Mandriva's plan is to move development on the desktop side of things to emerging countries, while Europe would focus on server development, since Linux is strong on servers over here. This idea didn't set well with the people working on Mandriva's desktop distribution, nor does it sit well with the community.
As a result, the only possible solution they saw was to fork Mandriva Linux, and create a new distribution. "Forking an existing open source project is never an easy decision to make, and forking Mandriva Linux is a huge task," they state in the announcement, "It was not an impulsive decision. We all spoke a lot before: former employees, Cooker contributors and users' communities. We collected opinions and reactions in the past weeks as we needed to get some kind of global agreement and to gather, before going ahead. We believe a fork is the best solution and we have decided to create a new distribution: Mageia."
Mageia will be a community-developed and backed project, independent from any company's whims. For now, a temporary board of community members is laying the ground work, setting up a not-for-profit organisation, and so on. After their first year, the board will be elected regularly by the community.
An interesting development, surely, and taking Mandriva's utter incompetence over the past decade into account, it's surprising it even took them this long to see the writing on the wall.