You may recall the iTunes DJ feature in older versions of iTunes. It allowed you to either queue up music or have iTunes play music at random from a specific playlist, or from your entire Music library, and a lot of people miss this option.
iTunes 11?s Up Next replaces the queuing feature, but there was no way to make a long shuffle playlist of your music. iTunes 11.1, released yesterday, has a new feature called Genius Shuffle. This is a way of turning on shuffle for your entire music library.
To activate this, choose Controls > Genius Shuffle, or press Option-Space. You can also press the Option key and click the << button, which changes as you can see here to show a Genius icon when you press the Option key:

Genius Shuffle is a quick way to listen to some music, when you have no idea what you want to listen to. Apparently, it looks at your entire library, and creates a playlist from the gestalt of your music tastes.
But Genius Shuffle doesn’t take all your music to create a playlist; it takes a subset of your music. For example, I started Genius Shuffle once, and it played a bunch of songs by the Grateful Dead, Bob Dylan, Hot Tuna and others; these are all artist whose music “goes together.” The next time, I got a playlist of my jazz artists. Another time, I got a playlist of artists like David Bowie, Kate Bush and Peter Gabriel. So Genius Shuffle changes each time you restart it.
You can see what’s coming up in the Genius Shuffle playlist by clicking on the Up Next icon in the iTunes LCD. And, as with Up Next, you can delete or re-order songs in that playlist.
If you want to create a new Genius Shuffle playlist, you can either click the Shuffle Again button you see atop the Up Next queue, or just press Option-Space again. Each new Genius Shuffle playlist will be a different genre or style of music.
In order to use Genius Shuffle, you need to have Genius activated. Go to the Store menu and choose Turn On Genius. (If you have iTunes Match on, Genius is on automatically, so you won’t have to do anything.)
One thing to know about Genius Shuffle: it does not respect the Skip When Shuffling option you can apply to tracks by selecting them and checking this box on the Options tab of the Info window. So you may end up getting Genius Shuffle playlists with music that isn’t fit for shuffling. For example, I don’t like to listen to classical music in shuffle mode, because it splits works. And I have a lot of spoken word content in my library, notably many recordings of Shakespeare plays. So these items can come up in a Genius Shuffle playlist. If this happens, just press Option-Space again to generate a new Genius Shuffle playlist.
It’s not clear how Genius Shuffle works, but I suspect it simply picks one track at random, then creates a Genius playlist from that track. It probably aims for higher rated tracks as its “seed” tracks, and for the subsequent playlists, and also probably takes into account the number of times you’ve listened to tracks, and even how recently. But I’m just speculating, based on my tests.
Genius Shuffle is an interesting idea. It’s worth trying it out to see if it works for you. And remember, if you like Genius, you can always create a Genius playlist from any song, instead of letting iTunes choose a random song. Hover your cursor over a song, click on the > icon, then choose Create Genius Playlist.