A gran fondo is a race usually 160-225 km long. The ones I have entered (Maratona dles Dolomites, Avesani, and Gran Fondo Italia) are competitive, timed events. All riders have timing chips attached to their bikes. Results by overall classification, age groups, and team competitions are posted immediately after the event and there are award presentations. While you can "take it easy" virtually everyone is there to do their best.
To enter these events you must pass a stress test and have a letter from your physician saying that you are approved for racing. That letter is than used to obtain your race permit.
The larger events offer additional courses of shorter lengths such as 120-160 km and under 120 km. These shorter courses use most of the same roads but take shortcuts to avoid some of the climbs.
The largest gran fondo is the Novi Colli. Novi Colli means 9 hills, and the event covers 210km and 9 hills through the Romanga countryside and Apennines hills. The event starts and finishes in the town of Cesenatico (home to the late Marco Pantani), just up the coast from Riccione, and attracts 10,000+riders from all over Europe. There is a shorter version of 130km and 4 hills.
The next largest gran fondo is the previously discussed Maratona dles Dolomites with 8,500 (the max limit set by the organizers) participants.
One of the most interesting and growing rapidly in popularity is the Gran Fondo L'Eroica. Entrants must ride vintage bikes so tubular tires, down tube shifters (even rear shifters!) are the norm to be ridden across the "white" roads of Tuscany.
There are hundreds of gran fondo events all throughout Italy. There is even a magazine dedicated specifically to this aspect of cycling in Italy. Some events are broadcast live on TV on RAI3.
The photo above is from the Gran Fondo Italia. It was smaller, and flatter (only one nasty, short climb), than the others I had raced in. So, it felt more like a race as there were always riders VERY close, lots of pacelines, bunches, etc. My heart rate was way up there the entire time not only from the effort but having to be insanely focused. I did the 62.1 mile route at a 20.5 mph average (I am improving!).
There are USA based bike tour operators that are now organizing tours around gran fondo participation. Some of the other most popular gran fondos are the Campagnolo, Pinarello, Colnago, and Dolomiti Stars.
If you want more details about gran fondo events I suggest you visit the website of my friend April: