The BBC has the basic details here:
Cities and towns across the northern Indian state of Punjab are shut in response to a general strike called by the Sikh community.
Security forces have been deployed and businesses and schools are closed for the day amid fears of violence.
Sikhs are demanding an apology from the leader of a religious sect who appeared in an advert dressed like one of the Sikh religion's most important figures.
Sikh community leaders say it is an insult to their religion. (link)
The DSS leader's name is Gurmeet Ram Rahim Singh, and there was controversy surrounding his leadership of the DSS before the current conflagration began. The DSS has grown quite rapidly in recent years, but its is also being investigated by the CBI on charges of sexual molestation, according to the Times of India:
The era also saw the sect embroiled in a number of contentious issues, especially those involving the dera chief. In 2003, an anonymous letter alleged sexual exploitation of young girls at the dera. Later, murder of a senior member of the dera and a Sirsa-based journalist set the rumour mills working overtime. Family members of the slain scribe moved the Punjab and Haryana High Court, demanding a CBI probe into the role of dera in the murder. The case was handed over to the CBI. However, the CBI probe moved at a slow pace despite the HC pulling up the investigating agency. Also, political pressure and protests by dera followers did not help.
More recently, the dera courted trouble just before the Punjab assembly elections this year. Though it enjoyed the patronage of both the Akali and Congress leaders, the president issued an edict asking his followers to support Congress candidates. According to sources, this favour was extended after the party (Punjab Congress) promised relief in the CBI case. Post elections, there have been complaints of Akalis harassing dera men. (link)
That last point in the TOI above suggests how much might be at stake in this conflict; it also shows how intimately religion and politics are intertwined in India. This is at once a religious and a political conflict, and suggestions that the state remain neutral on a matter of religious doctrine, while correct in principle, do not really seem to apply. (It's yet another reminder of how difficult it can be to comprehend India's "secularism")
As a final comment, I should note that while I myself don't have very much first-hand knowledge of the various Dera sects (there are dozens) that are currently active all over Punjab and its neighboring states, a blogger named SidhuSaaheb (via Neha Vishwanathan at Global Voices Online) does have a fair bit to say about the DSS:
As I keep track of the coverage, in newspapers and on television, of the Dera Sacha Sauda controversy, there are a few things that strike me as strange.
Firstly, the Dera has been described as a 'Sikh sect' in certain sections of the news media, whereas it has nothing to do with Sikhism (or any other religious faith, as for that matter).
Secondly, something that has been part of conversations in urban drawing-rooms and rural baithhaks in Punjab i.e. the Dera head issued an edict to his followers to vote for Congress (I) in the recent state assembly elections, only because that party offered to help 'dispose off' the criminal cases filed against the Baba and his followers (the charges include murder and sexual abuse), in case it was able to form the government, does not appear to have been mentioned in any newspaper or on any television channel.
Thirdly, most media reports seem to imply that the Sikhs have been outraged merely by the fact that the Baba appeared dressed like Guru Gobind Singh, whereas, the truth is that he not only dressed like the Guru, but also attempted to replicate, to a large extent, what the Guru did on the day of the foundation of the Khalsa (in spite of the counter-claims made in the latest press statement put out by the Dera). He tried to do a 'role play', in which he put himself in the place of the Tenth Master. (link)
He goes on to make some direct allegations about the murder of a family member by DSS members.
The note of outrage in SidhuSaaheb's account of Baba Gurmeet Ram Rahim Singh's actions is one I've also heard from every other Sikh I've talked to in recent weeks, as this has been unfolding. The sense of outrage is also very much present in this Outlook article by Chander Suta Dogra.