Marketing, screen size and apps. Amazon for now, as far as I can tell, is positioning it as a "Amazon content consumption device" instead of a "lifestyle companion".
Mind you, I don't disagree. I think you'd have to be a little ridiculous to own both a Fire and an iPad, and a 10inch Fire is likely inevitable in a couple of years. On the other hand, I'm about to buy the old Kindle and am aiming to maybe purchase an iPad3 down the road.
I love this because it gives Apple competition. Finally, a viable tablet competitor.