Instead of being an x% increase in damage and x% increase in critical damage to the foe in question, it becomes a flat x% increase in damage. Point for point this provides less than the old versions for each type individually, but is superior for four reasons:
More DPS increase total - 5% damage increase is usually better than 3% damage, 3% crit damage.
Saves a talent point - you only spend 5 points total, not 6 like you would if you wanted to maximize the effect versus all targets.
More versatile - works on Elementals, Demons, and Undead as well as everything the old versions did.
Cleaner tree - no longer do you feel obligated to take 3/3 Hawk eye and then be forced into taking either a partial talent or Savage Strikes.
Patch 3.2.0 (04-Aug-2009): The tooltip for Improved Tracking has been slightly re-written to indicate that it only works on the hunter, and works on melee damage as well.
Patch 3.0.8 (2009-01-20): This talent has been slightly re-designed. Now reads: While tracking Beasts, Demons, Dragonkin, Elementals, Giants, Humanoids and Undead, all ranged damage done to those types is increased by 1/2/3/4/5%.
Was "Increases all non-periodic damage done to targets that are being tracked 1/2/3/4/5%."