Indonesia Volcanology Centre and Geological Hazard Mitigation (PVMBG) prohibits people to approach Krakatau volcano within a radius of 2 kilometer. Krakatau has been seismically overactive since Tuesday.
On September 30 PVMBG increased the alert status from 2 to 3 (on a scale from 0 to 4).

Although nothing uncommon happens visually at the moment (Krakatau has small explosive eruptions many times a day all year), the number of volcanic earthquakes is very high since Tuesday.   

The PVMBG specialists who are guarding the volcano are saying however that a violent eruption generating a tsunami is highly unlikely at this alert level (krakatau is an island and a huge part of the volcano is below sea level). Many coastal villages in the Sunda strait are very scared that this volcano with a violent past will explode again. Scientists can  predict volcano eruptions fairly good today. GPS recordings which show an eventual deformation of parts of the volcano are giving a good hint in the potential danger.
The inhabitants of the coastal villages have been told by the scientists that they should calm down because a major eruption like the 1883 is highly unlikely at this moment.

Additional Krakatau report as mentioned in the weekly Global Volcanism Program report from September 28 – October 4
CVGHM reported that seismicity from Anak Krakatau in 2011, as late as 10 July, consisted of 20-30 volcanic-earthquake events per day and shallow events ranged from 120 to 135 events per day. Hundreds of events per day were detected during swarms. On 10 July, the seismic equipment was damaged by Krakatau's activity but was again operational in mid-September. During 18-30 September seismic events reached 4-5 events per minute. Visual observations in 2011 until 13 September indicated occasional explosive eruptions that would eject material and produce ash plumes. During 14-30 September fumarolic activity from the crater and in the fumarolic fields was visible. The Alert Level was increased to 3 (on a scale of 1-4) on 30 September based on an increase in seismic activity and widespread fumarolic activity.

Recent activity

Anak Krakatau has grown at an average rate of five inches (13 cm) per week since the 1950s. This equates to an average growth of 6.8 meters per year. The island is still active, with its most recent eruptive episode having begun in 1994.
Quiet periods of a few days have alternated with almost continuous Strombolian eruptions since then, with occasional much larger explosions.
The eruption in April 2008 saw hot gazes, rocks, and lava released.

Video of November 1 2010 activity

The best way to describe a volcano is to watch this 4 minute 40 seconds video from @typhoonfury. The video shows some spectacular explosive eruptions (especially the ash explosions and volcanic lightning's). Enjoy, but do not forget to read the 1883 eruption description below.

[youtube nXzQT52Sdec]

The cruel 1883 Krakatau eruption / explosion / caldera collapse

The 1883 eruption of Krakatau began in May 1883 and culminated with the destruction of Krakatau on 27 August 1883.

On 27 August four enormous explosions took place at 05:30, 06:44, 10:02, and 10:41 local time. The explosions were so violent that they were heard 3,500 km (2,200 mi) away in Perth, Western Australia and the Indian Ocean island of Rodrigues near Mauritius, 4,800 km (3,000 mi) away, where they were thought to be cannon fire from a nearby ship.
Each eruption was accompanied by very large tsunamis, which are believed to have been over 30 meters (100 ft) high in places. A large area of the Sunda Strait and a number of places on the Sumatran coast were affected by pyroclastic flows from the volcano.

The pressure wave generated by the colossal final explosion radiated from Krakatoa at 1,086 km/h (675 mph). It was so powerful that it ruptured the eardrums of sailors on ships in the Sunda Strait. The pressure wave radiated across the globe and was recorded on barographs all over the world. Ash was propelled to a height of 80 km (50 mi). The eruptions diminished rapidly after that point, and by the morning of August 28 Krakatau was silent.

Around noon on August 27, a rain of hot ash fell around Ketimbang (now Katibung in Lampung Province) in Sumatra. Around a thousand people were killed, the only large number of victims killed by Krakatau itself, and not the waves or after-effects. The region of the ashfall ended to the northwest of Ketimbang, where the bulk of Sebesi Island offered protection from any horizontal surges.

The combination of pyroclastic flows, volcanic ashes and tsunamis had disastrous results in the region. There were no survivors from 3,000 people located at the island of Sebesi, about 13 km (8.1 mi) from Krakatau. Pyroclastic flows killed around 1,000 people at Ketimbang on the coast of Sumatra some 40 km (25 mi) north from Krakatau. The official death toll recorded by the Dutch authorities was 36,417, although some sources put the estimate at 120,000 or more. Many settlements were destroyed, including Teluk Betung and Ketimbang in Sumatra, and Sirik and Serang in Java. The areas of Banten on Java and the Lampung on Sumatra were devastated.

Ships as far away as South Africa rocked as tsunamis hit them, and the bodies of victims were found floating in the ocean for weeks after the event. The tsunamis which accompanied the eruption are believed to have been caused by gigantic pyroclastic flows entering the sea; each of the four great explosions was accompanied by a massive pyroclastic flow resulting from the gravitational collapse of the eruption column. This caused several cubic kilometers of material to enter the sea, displacing an equally huge volume of seawater. The town of Merak was destroyed by a tsunami 46 m (151 ft) high. Some of the pyroclastic flows reached the Sumatran coast as much as 40 km (25 mi) away, having apparently moved across the water on a "cushion" of superheated steam. There are also indications of submarine pyroclastic flows reaching 15 km (9.3 mi) from the volcano.

A recent documentary film showed tests made by a research team at the University of Kiel, Germany, of pyroclastic flows moving over water. The tests revealed that hot ash traveled over the water on a cloud of superheated steam, continuing to be a pyroclastic flow after crossing water; the heavy matter precipitated out of the flow shortly after initial contact with the water, creating a tsunami due to the precipitate mass.
Text and image 1883 from Wikipedia

Volcano information

The renowned volcano Krakatau (frequently misstated as Krakatoa) lies in the Sunda Strait between Java and Sumatra. Collapse of the ancestral Krakatau edifice, perhaps in 416 AD, formed a 7-km-wide caldera. Remnants of this ancestral volcano are preserved in Verlaten and Lang Islands; subsequently Rakata, Danan and Perbuwatan volcanoes were formed, coalescing to create the pre-1883 Krakatau Island.
Caldera collapse during the catastrophic 1883 eruption destroyed Danan and Perbuwatan volcanoes, and left only a remnant of Rakata volcano. This eruption, the 2nd largest in Indonesia during historical time, caused more than 36,000 fatalities, most as a result of devastating tsunamis that swept the adjacent coastlines of Sumatra and Java. Pyroclastic surges traveled 40 km across the Sunda Strait and reached the Sumatra coast. After a quiescence of less than a half century, the post-collapse cone of Anak Krakatau (Child of Krakatau) was constructed within the 1883 caldera at a point between the former cones of Danan and Perbuwatan. Anak Krakatau has been the site of frequent eruptions since 1927.
Text courtesy Global Volcanism Program and the Smithsonian Institution