This is research that I've been following for quite a while. It's interesting to take a historical perspective and look over the advancements that led to this achievement. Like most science, this research came along painfully slowly, and the researchers ran into many obstacles and dead ends.
The research has its beginning in a simple question, "what is the minimum genome that an organism needs to survive?" The research began in 1995 when Venter and colleagues sequenced the genome of Mycoplasma genitalium, whose 580,070 base pair genome is the smallest of any free-living organism. These scientists then began to tinker with the M. genitalium genome, inactivating different genes, and four years later in 1999 published a paper showing that only about 250-350 of the bacterium's genes were essential for survival. However, they obtained this result by inactivating genes one-by-one and seeing if the bugs still lived. One could argue that there might be synergistic effects between genes, so even if gene A and gene B are individually not required for survival, knocking both out at the same time could kill the organism. It seemed the only way to really rigorously determine the minimal genome required for an organism was to synthesize a minimum genome from scratch and see if it could survive.
In 2003, Venter founded an institute to tackle this enormous challenge and raised millions of dollars to do so. He brashly proclaimed that within 3 years, his institute could chemically synthesize a bacterial genome from scratch. In reality, it took five years and in 2008, Venter's institute published that they had synthesized the first synthetic bacterial genome, the 580,070 base pairs of M. genitalium. However, in the meantime, the institute had also developed a method for transplanting the genome of one bacterium into another bacterium, research that they published in 2007. Thus, in 2008, Venter's institute seemed to have all the pieces in place to create a bacterium with a synthetic genome.
Of course, in science, nothing is ever straightforward. Although the small size of M. genitalium was advantageous, the bacteria grew really slowly greatly hindering the speed of the research. Biting the bullet, they decided to switch to using the genome of the related bacterium M. mycoides, whose genome was nearly twice as large as that of M. genitalium, but the bacteria grew much faster. After they had finally synthesized and assembled the M. mycoides genome, they transplanted the genome into the host and... nothing happened. It turns out that they had made an error in a single base pair in a very important gene, a typo that took about 3 months to discover and correct.
Of course, all of these publications that I've mentioned have been landmark discoveries. Figuring out how to efficiently synthesize and assemble a synthetic bacterial genome was a landmark discovery. Showing that it was possible to transplant a bacterial genome into a host cell of a different species was a landmark discovery. Yet, these were two small steps toward this study, also a landmark paper in the field of synthetic biology. However, from a broader view, this paper is also just a small step toward synthetic life.
While the bacterium that Venter and colleagues created contains a synthetic genome, it was placed into an already functioning host. Furthermore, the host bacterium is closely related to the M. mycoides genome the authors used, so many of the hosts' biological processes were compatible with the synthetic genome, allowing the host's machinery to correctly read the synthetic genome. Eventually the host's machinery gets entirely replaced with components from the synthetic genome. However, it is still unclear whether this approach can work with genomes containing significant portions of DNA that are unrelated to the host genome and require different regulatory machinery to work. This point will be crucial if these synthetic bacteria are to be created for biotechnological applications. Therefore, the next big step in this field will be to show that any arbitrary genome can be "booted" into any arbitrary host. And, based on what Venter's institute has shown before, I have a feeling that they might actually get this to work too.
References:
Fraser et al. 1995. The Minimal Gene Complement of Mycoplasma genitalium. Science 270: 397-404. http://dx.doi.org/10.1126/science.270.5235.397
Hutchison et al.. 1999. Global Transposon Mutagenesis and a Minimal Mycoplasma Genome. Science 286: 2165 - 2169. http://dx.doi.org/10.1126/science.286.5447.2165
Gibson et al. 2008. Complete Chemical Synthesis, Assembly, and Cloning of a Mycoplasma genitalium Genome. Science 319: 1215 - 1220. http://dx.doi.org/10.1126/science.1151721
Lartigue et al. 2007. Genome Transplantation in Bacteria: Changing One Species to Another. Science 317: 632 - 638. http://dx.doi.org/10.1126/science.1144622