The offer isn't good for the Nook Touch (which B&N was still selling as late as the middle of last year), and it would seem to only be good for buying new hardware (in other words the credit can't simply be applied to your Nook account). But if you've been thinking about upgrading your existing Nook device, now would be a good time.
It is a shame that this wasn't announced last week, though. You could have combined this credit with the Black Friday sale and gotten the Galaxy Tab 4 Nook 7" for under $100.
For more details on the trade in offer, check out B&N.