To supplement the previous answer: there is a paper on this that is mostly about learning low-level capsules from raw data, but explains Hinton's conception of a capsule in its introductory section: http://www.cs.toronto.edu/~fritz/absps/transauto6.pdf
It's also worth noting that the link to the MIT talk in the answer above seems to be working again.
According to Hinton, a "capsule" is a subset of neurons within a layer that outputs both an "instantiation parameter" indicating whether an entity is present within a limited domain and a vector of "pose parameters" specifying the pose of the entity relative to a canonical version.
The parameters output by low-level capsules are converted into predictions for the pose of the entities represented by higher-level capsules, which are activated if the predictions agree and output their own parameters (the higher-level pose parameters being averages of the predictions received).
Hinton speculates that this high-dimensional coincidence detection is what mini-column organization in the brain is for. His main goal seems to be replacing the max pooling used in convolutional networks, in which deeper layers lose information about pose.