The artifact library will be a hosted service within K2 that permits things from the K2 Studio design canvas to be dragged into it. The Artifact Library service will then store this artifact and surface it to other K2 developers for use in other processes. For example, suppose you have a configured an email that you think could be useful in other projects, you will be able to drag it over to the AL and then another K2 developer will be able to drag it out on to his/her design canvas and reuse it there.
I don't believe this is implemented in Beta 1 (but am not positive; I'm not looking at a blackpoint system right now).
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