New water visuals
This update adds new water rendering features from newer Source Engine games to Garry's Mod. Here's a comparison video:
This includes flow maps, lightmaps and ability to reflect 3D skybox. This both improves compatibility with mountable games, as well as enables map makers to use these new features in their maps.
It must be noted that these changes may unexpectedly affect a small amount of existing maps. The issue here is that some map makers are using (modified) water materials from other Source Engine games which have parameters that did not previously work, but do work correctly now, causing unexpected changes in water appearance. This is unfortunately unavoidable from our end, and will need to be individually fixed by map makers by editing their water materials. No map recompilation needed.
4-way blends
Another port from newer Source Engine games is the 4-way blend shader.
This is also going to help map makers make better looking maps, easier.
Built-in NPC improvements
A long standing issue from the very inception of Garry's Mod was the lackluster support for weapons used by NPCs, especially when NPCs use weapons that they never used in Half-Life 2. This update finally addresses these issues.
NPCs no longer T-pose when trying to use non default weapons, such as Metrocops using RPGs or AR2s, Combine Soldiers can not only use all the built-in weapons without issue, but also run around and chase the player with no weapons. Citizens no longer stand up to shoot when crouched.
More NPCs can now use weapons as well, providing more options than ever.

With improvements to duplicator support for Half-Life 2 entities, Resistance-hacked Combine Mines are now available from the spawnmenu, and both it and the Flechette Gun are now available for all players, regardless of what games are mounted.

Sandbox improvements
Faceposer got some minor improvements with the ability to randomize or clear only a specific category of sliders:

And an option for Spawn Menu and Context Menu keys to act as a toggle has been added to the Utilities panel:

Other stuff
As per usual, this update also brings a set of under the hood fixes and optimizations, and of course a number of new Lua API features have been added.
The full change log can be found below.