I just got a PS3 and i see there is a button on the PS3 menu saying remote play. I know that you can connect your psp to your PS3 with this,but what can you do in remote play?

Don't you mean "remote Play"

 Yeah. I hit the r instead of the t on my keyboard

I onestly don't exactly know,,but you can play with PSP instead of DS3 and transfer movies and stuff like that I think.but don't take my words

http://en.wikipedia.org/wiki/Remote_Play

The main features as I understood it is that you can control your PS3 from anywhere (as long as you have a net connection that is), this enables you to (as listed in the link above) view photos, listen to music and watch movies/videos that are on your PS3 HDD or elsewhere, as well as play some games over a network that are stored on your PS3, exmaple being most Ps1 classic and others...Most of this works, I do it a fair amout.

just lick on the link above....

You can watch your saved videos, listen to your saved music, view your saved Photos. You can Play PS1 games that are in you PS3 from your PSP, use the PlayStation Store, and play some PS3 game on your PSP ( I think Lair is the only one till now).