A release party is most typically an event that is organised for the day that a new Ubuntu version is released. This party can take many different forms, and include one or more of the following activities:
General socialising - getting people together to chat socially, possibly over a few drinks or dinner.
Talks - presentations given about Ubuntu and the new release. In many cases key figures or contributors are invited to speak at release parties.
Demos - the release party could be used as a means to invite non-Ubuntu users to come and see a demo of how Ubuntu works.