As Xeni wrote, Twitter has adopted Google's tactics for coping with legally binding censorship demands: from now on, when it receives a legal demand to censor a tweet, it will only censor that tweet for users in the country from which the demand emanates. Other countries' users will still see it. Users in the censored country will see a notice that material has been censored. Additionally, all censorship demands will be archived at Chillngeffects.org, a clearinghouse that tracks Internet censorship.
In many ways, this is preferable to the existing system, whereby legally enforceable censorship orders would affect all Twitter users. And of course, Twitter only has to honor censorship demands in countries where it has offices and assets; Lower Pottsylvania can require removal of every mention of Glorious Leader, but unless Twitter has an office there, it can safely ignore the orders (JWZ points out
that Twitter has opened offices in many censorious countries and plans to open offices in more that if Twitter expands into censorious countries to attain its goal of one billion users, it will expose itself to more censorship requests, and that this expansion will be profit-driven as well because there's money to be had by setting up local operations there).
It's not a coincidence that Twitter's censorship strategy is similar to Google's — they were both set up by Alex Macgillivray, a Berkman Fellow and attorney who recently left Google for Twitter.
One interesting difference between Google's censorship handling and Twitter's is the ability of users to directly communicate with one another in a fast and fluid manner. If a tweet is censored in Saudi Arabia, it will be very easy for Saudi users to find non-Saudi users and ask, "What was in that censored message?" and then retweet it.
Among other things, Twitter wants to expand its audience from about 100 million active uses to more than 1 billion.
Reaching that goal will require expanding into more countries, which will mean Twitter will be more likely to have to submit to laws that run counter to the free-expression protections guaranteed under the first amendment in the US.