I spoke to JulieO this afternoon and she's working on a new Q&A that basically takes the old Q&A and adds any questions she received during the last contest. But basically, the contest runs 4 weeks. Each week you will be given a challenge, it might be to design a kit using a specific palette, or a theme. You'll all be given the same amount of time to create the kits, then members will be allowed to download the kits and vote on their favorites. A certain percentage will move on to the next round.
It's a great way to expose your designs to a lot of people. I know I've kept my eye on other sites' contests and contacted designers after the contest was over if I liked their work.