It's a desktop environment, not a distro. It's a competitor to GNOME and KDE.
I don't they are 'competitors' in the normal sense of the world. Alternatives, may be a better word.
XFCE, takes it's cue from the old CDE environment, as as it's based of GTK, all most if not all gnome stuff works really nicely on it, without all the gnome bloat.
KDE4 is supposed to have built in compositing negating the need for compiz et al.
Personally I have used gnome and KDE alternately since the beginning, and I kinda went gnome 1-> Kde2 -> back to gnome after 2 . all the time running a main station of win2k until about 8 months ago when i moved to winxp.
KDE really does have some fantastic integration between it's components, kioslaves, and all the rest are really sweet. Konqueror is too bloated for me, but it is a great web browser. and fast.
Gnome even though it looks great and is really easy to use, nice default etc, still has some majorly RETARDED functionality. Take for instance the recycle bin (trash whatever) How do you restore a file from the bin? Oh that's right you can't.
Create 2 new folders on the desktop, open them up where do the windows appear? That's right slap bang on top of each other. Spatial mode would be awesome if they obeyed the simples laws thry should follow but they don't, it's half baked.
Nautilus is slow, clunky, and restricting.
There's so many of these things that probably 95% of people don't notice, but they really annoy me. So that's why I stay on XP just now. Last time I used ubuntu I couldn't use a gui to burn an Audio cd without using k3b (which is awesome)
perhaps it's better now.