This is a the excellent Trumbowyg JavaScript library, wrapped in a RubyGem.
It is geared towards the Rails (>3.1) assets pipeline.
Just add
gem 'trumbowyg'
to your Gemfile.
Then require the JavaScript files in app/assets, for example in your application.js:
//= require trumbowyg
Make sure you load Trumbowyg after jQuery.
Also require the stylesheets, in your application.css:
*= require trumbowyg