Why is Lula released?
He is released because the Supreme Court has ruled that it is incompatible with the constitution for people to be jailed before exhausting all legal opportunities to appeal.
What does it mean for Brazil?
This is a political bomb because Lula da Silva is the politician who has dominated Brazilian politics for the last 20 years. He is still very much loved by many, especially many poor who got better during the eight years in power. At the same time, there is another section of the population that hates Lula more than anything else, especially the incumbent President Jair Bolsonaro's supporters.
The release is also of great importance because the Brazilian opposition has been paralyzed after Bolsonaro's surprising election victory last year, and has lacked a natural leadership figure. When Lula is out, with his political weight, he can become a real counterbalance to President Bolsonaro.
What happens now?
He has just given a short speech where he has attacked the judiciary, which, he says, put him behind locks and bars on incorrect grounds. He also attacked President Bolsonaro and showed that he has absolutely no plans to retire and calmly age.
So far, President Bolsonoro has been completely silent and it may indicate that he does not know how to act. But there are already initiatives in Parliament that want to try to overturn HD's decision, so you can expect a continued legal tug of war.
But the big question is whether it will even be Lula against Bolsonaro in the next presidential election in three years. Then the political situation will become even more turbulent. So far he is not allowed to stand for legal reasons, but there are those who believe that HD's decision in the extension may mean that the ban is also lifted.