This article from the BBC provides both more recent information than my previous post and some cogent analysis. I concur with the BBC that Brazil is taking this opportunity to exhibit leadership as a regional power, second only to the United States in the Western Hemisphere.
Embassies are treated as small zones of sovereign territory; this recognition allows President Zelaya to be in Tegucigalpa unharmed, as long as he is the guest of the Brazilian government. The de facto government may have limited respect for the rule of law, but it is not willing to transgress this diplomatic barrier.
It is clearly, ready, to test limits, and has cut off electricity and other connections to the Embassy. And although it is proud not to have killed any civilians, it has not refrained from beatings and tear gas as a means of discouraging any kind of rallying around the president.
Officials at the U.S. Embassy have offered to help their diplomatic colleagues from Brazil, though it is not clear what they can offer.
Where is it? Why is it there? So what?
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Geographers apply spatial understanding to the real world.
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