The Ambassador Class Starship is classified as a heavy cruiser, much like the original Constitution Class Enterprise was. Approximately the same length as an Excelsior Class Starship (but much more massive), starships of this class appear infrequently in the Star Trek universe, which is odd - if the longevity of the Excelsior Class is any indication, Ambassador Class Starships should be in service throughout the run of Deep Space Nine (the battle sequences of which picture starships as old as the Miranda Class getting the snot kicked out of them) and they don't; one must therefore postulate that they has some design flaw or change in design philosophy that necessitated their early retirement.
Design History and Chronology
If you compare spaceframe elements of Excelsior and Galaxy Class Starships, you'll notice that there is a marked difference in the way those classes were designed - Galaxy's components are more rounded and fluid, embodying a design philosophy that bears practically no relation to Excelsior's relatively boxy lines. Clearly, an intermediate step was necessary to get from the one to the other, and Ambassador fills that role neatly.
The first mention of the Ambassador class is in The Next Generation's first season episode Conspiracy, aka 'the-one-where-that-guy's-head-explodes'. The USS Horatio, Commanded by Walker Keel (an old Friend of Jean-Luc Picard and Beverly Crusher) was mentioned to be in orbit of Dytallix B but wasn't shown, at least not in one piece. The class' first on-screen appearance was in what most Star Trek afficianados call the Best Next Generation Episode Ever, Yesterday's Enterprise, in which the Enterprise-C emerges from a temporal rift and and alters the timeline, bringing Tasha Yar back to life (ok, technically not killing her off in the first place) and dropping the Federation into a decades long Klingon war, a war not going particularly well for the Federation.
Since then, Ambassador class starships have been infrequently mentioned and rarely seen, though they occasionally appear as escorts or transport ships in lieu of the older Excelsior Class. There are also a few wrecked Ambassador Class models in the starship graveyard sequence following the battle of Wolf 359.
Hull Configuration
The saucer section of an Ambassador Class Starship is perfectly round and is apparently the last starship class to be so. Its secondary hull is similar to that of the Constitution Class but wider, and rounds off at the back with a small shuttlebay. The nacelle pylons are reminiscent of the Galaxy class, but longer - the nacelles are connected to L-shaped supports that attach to the sides of the secondary hull, while the nacelles themselves are reminiscent of the pre-refit Constitution Class with large hemispherical brussard ramscoops capping the ends. What we end up with is a ship that looks enough like an enterprise to be instantly recognizable as one without being firmly weighted to one time period or another.
Armament
This class marks the first appearance (timeline-wise) of the new phaser array technology which replaced the phaser turrets found on older ships - these arrays are capable of targeting multiple hostile spacecraft in a single volley as well as greatly improving the ship's phaser arcs beyond a fore and aft 90 degree field of fire. The class also incorporates forward and aft photon torpedo launchers into her spaceframe.
Continuity issues
This class was incredibly short-lived. Why this is isn't particularly clear and, since no other ship configurations exist that match this class' design elements, it's possible that it was a wholly intermediary step between the movie years and The Next Generation. Whether more ships of this era appear in later movies/series remains to be seen, but as of this writing the Ambassador Class was a one-off design that was quickly superceded by Galaxy and their ilk.