Oracle released Java 7 Update 11 yesterday, and with it comes a new default Security Level. The previous Java version, Update 10, introduced some new security settings found under the Security tab of the Java Control Panel. In addition to adding the ability to universally disable Java for web browser content across all of your installed web browsers (instead of needing to disable Java on a per web browser basis), it includes a new Security Level selector. The selector, which is similar to the "Trusted sites" security setting configuration found in the Internet Explorer web browser, is used to set a default security level for Java content encountered with your browser on the web. The default Security Level with Java 7 Update 10 was "Medium".
However, with the release of Java 7 Update 11, Oracle has changed the default Security level to "High". This new default Security Level will cause new prompts to display when you encounter Java applets, such as the ParaChat Java chat room client, with your web browser. More information and screenshots are found in this Knowledgebase article and in this video tutorial.