The Blue Sword takes place generations after the events of Hero; Aerin is a legend and the former land of Damar is part of the Homeland empire. After her father dies, Harry Crewe is sent there to live with her soldier brother. She is drawn to the hills and to the free-folk who live there, and their king, Corlath, is in return drawn to her. He abducts her, trains her, and she becomes Harimad-sol, the first woman since Aerin to wield the blue sword.
This is a fun book to read -- the story is interesting and the people and places feel real. Unlike my experience with Hero, however, I first read this book as teenager, not as a kid. I think that may be why I couldn't get past Corlath kidnapping Harry, which is a very pivotal plot point. While I enjoyed the book, this event colored my opinion of the characters and because of it, I had a hard time with the ending. Maybe some authors can gloss over difficult subjects in their books for younger readers, but Robin McKinley is generally good about confronting them head on and I thought this was a bit of a cop out. None of this is to say that I don't think its a good book; it is and I recommend it to any young adult reader. I just think it could have been better.
As a side note, the question may come up of which book should you read first -- Hero, since its first chronologically or Sword, as it was written first? This is probably my bias since this is how I read them, but I would suggest reading Hero first, especially for younger readers. Both books stand alone pretty well, though, so its fine either way.
Buy The Blue Sword on Amazon.