The NBA players, or at least those that showed up for a Monday meeting in New York, decided the latest offer from the owners side wasn't going to work for them so they rejected it. Instead of making a final counter-proposal or taking other steps to continue the negotiation process despite commissioner David Stern's assertion it was over, they took the legal step of dissolving the union and taking the matter to court.
The legal kind of court, not the basketball court.
The move puts the entire season in serious jeopardy as the process will likely drag out for many months as both sides fight out the details of an anti-trust lawsuit.
The latest deal from the owners contained changes to the system of free agency and other details related to how much money teams could spend that the players felt would hurt them. The players, however, had already agreed to a 50/50 split of revenue and never explained how the NBA's latest offer actually impacted them.
The league will likely now cancel more games and we could expect to see teams lay off employees as the settle in for the long haul. They've also said they will void all existing contracts.
It remains possible that negotiations could continue and a deal could be reached despite this turn of events. It's just not very likely.