The major change which I feel is the display appearance of the menu, settings menu, notification drawer and navigation buttons. Altogether I feel more simplicity in the appearance and layout. There is also a noticeable change in the keyboard layout, they have removed the separate key block for each letter and arranged the simple QWERTY keyboard in a light grey background with black letters. But we can switch to dark background with white letter theme also. Before this update itself Google has brought small changes in their icon of Google play store, Google keep etc. However Google technically named this layout as Material Design. As most of the newer Nexus devices are using IPS display this layout makes this display more attractive than a black background.
The controls icons inside notification drawer are spaced liberally and which consists of 7 icons for Wi-Fi, network etc. and the newest icons are a native flashlight icon by Google and cast screen to view your mobile screen in Smart TV . The back button icon changed to small inverted triangle, home button icon changed to small circle and Inside the menu also there are some addition of inbuilt apps from Google like Google docs, Google sheets, Google slides which allows you to create and edit documents, spreadsheets, presentations respectively and sync between your devices. Also one more inbuilt app Google fit which allows you to pair with your watch or sports gear, now a days a lot of devices are available in market which tracks your exercise patterns, heartbeat and some devices monitors your blood pressure too, from this nascent app we can expect Google is planning something big in healthcare industry. Those who haven't yet received this Lollipop update can manually install these apps from play store.
The contacts layout has now changed with alphabet highlighting view and the call log looks somewhat like a tile pattern. The gallery icon is removed and there is only photos icon present to view the gallery files. The camera has more functionality, the options inside are camera are photosphere, panoramic, lens blur, photo and video mode. The default video player is smoother to play MP4 files but still doesn't support fully some popular formats like MKV, VOB FLV etc. Till now I used MX player to play these formats but presently MX player is not supported by the version of Android 5. Still there no default file explorer. There is a guest mode on nexus 5 after this update as similar to our laptops and computers.
The major thing that Google has highlighted in the newer update is the battery life and overall smoothness and performance of the device. Certainly the performance of the device is much improved and the touch and the applications run smooth and fast than before. But I don't feel the battery life has a major improvement. We can expect some minor updates from Google after fixing some unnoticeable bugs.