Current law, "prohibits food stored or prepared in a private home from being used or offered for sale in a food facility." People saw this as a safety measure, but many other countries (and 30 other states) have thriving home/restaurant businesses that offer economic opportunities to those who may not have the means to rent out commercial kitchens which can include a thousand dollar deposits on top of hourly fees.
However, AB 1616 loosens the rules by classifying private homes as food facilities aka cottage food operations. There are still some regulations though the new law will, "require a cottage food operation to meet specified requirements relating to training, sanitation, preparation, labeling, and permissible types of sales and would subject a cottage food operation to inspections under specified circumstances."
The type of goods permissible under the law would not be allowed to contain any meat or cream and would still be subject to proper labeling but can be sold in restaurants, stores, or directly to consumers.
The bill fits into two national food trends: local and healthy. Allowing home goods to be sold more widely can reduces the reliance on larger companies which often load their products with harsh chemicals including preservatives.
Read more about this in this LA Times article.
http://articles.latimes.com/2012/aug/28/business/la-fi-homemade-food-20120829
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