The legislation referred to as Section 508, signed into law by President Clinton in 1998, is actually an amendment to the Workforce Rehabilitation Act of 1973 that requires electronic and information technology developed by or purchased by federal agencies be accessible by people with disabilities.
The 1986 version of Section 508 established non-binding guidelines for technology accessibility, while the 1998 version created binding, enforceable standards that are incorporated into the Federal procurement process.
In addition to providing for enforceable standards, the amended Section 508 established a complaint procedure and reporting requirements, which further strengthen the law.
Contrary to what you may read on the web, Section 508 does not directly apply to private sector web sites or to public sites that are not U.S. Federal agency sites. In fact it doesn't even apply to the Congress or to the Judiciary. It also does not (generally) apply to agencies or establishments using federal funds. So if it does not apply to all these institutions, what's the purpose? Those who crafted the law noted that the combined purchasing power of Federal agencies is tremendous. They believed that if the Federal agencies required accessible IT, then companies would respond by (1) offering accessible IT to the government and (2) rather than have two sets of products, they would offer accessible IT for everybody. At IBM in the late 90's, for example, the decision was made to build accessibility into the entire development process -- company wide. It just didn't make sense to have two sets of products.
While our focus in this course is web accessibility, Section 508 provides accessibility standards for all information technology, including computer software, hardware, and documentation. And, when states wanted to require accessible information technology, they turned to the Section 508 Accessibility Standards to define "accessibility". Check out the ITTATC web site for a survey of state requirements for accessibility, most of which refer to Section 508.
Federal agencies must purchase electronic and information technology that is accessible to employees and members of the public who have a disability, providing that it is not an undue burden on the agency. Thus if two companies are bidding on a government contract and one is offering accessible solutions, then the accessible technology is likely to (should) win the contract.