Xyz Monsters have Ranks instead of levels, and the rank is stated in the left side of the card. Their rank normally (for now) states the levels the monsters must be in order to summon. In order to perform an Xyz Summon, you must have 2 monsters of equal level (which indicates their rank) and place them together in the same monster zone below the newly summoned Xyz Monster.
Those monsters are now Xyz Material Monsters and used accordingly with the new monster's abilities. When a material must be removed, it is sent to the graveyard.
Here's a look at another Xyz Monster
Since it's Rank 3 it lets us know it needs 2 Level 3 monsters for it's summoning condition.
There are still some unknown details concerning these new monsters, along with unknown ruling issues that will be notified once released.
But for now, this is all we know of these new monsters.