Literature Flay-rah for the Imagination
I imagine you've heard about the not-for-kids reputation the movie has. Fortunately, the book is sufficiently long that any kid not terrified at the length should be able to handle it.
Has all the elements of a great story- the epic journey, the elaborate break-out-of-the-inescapable-prison sequence, and the epic final battle, just using rabbits instead of humans.
A lot of effort put into the worldbuilding; the author goes through the trouble of establishing an entire Lapine mythology, with fully fleshed-out legends interspersed with the story. There's also some Fictionary in there. It generally avoids overloading one with more than two Lapine words in a sentence, though there is one memorable line left to the reader to translate...
Most major characters are memorable, with distinguishable personalities- Hazel, Fiver, Bigwig, Keharr... The villian, Woundwort, is given complex characterization as well.
Bunnies are serious business.
Literature A Timeless Classic
The book and the film both go together quite well to tell an epic story. The characters were very well-done, the story flows very nicely, and it is a very easy read. Some concepts of the book might be lost on younger children, but they will still enjoy the book nevertheless. The film is bloody and scary in places, but any teenager or 10-12 year old should be able to handle it. Adults can also find the book very enjoyable, especially if they had read it once during their childhood, and then again when they were old enough to understand some of the more complex ideas hidden amongst the more simple words.
If you read the book, you should also see the film. If you've seen the film, you should definitely read the book — they fill each other out nicely. The film was kept true to the book as possible (some parts were shortened or re-arranged so that the film was not 3+ hours long). The book fills in a lot more details than the film does, but yet the film gives you a good visualization of the things the book talks about.
Also, if you like the book, you should definitely check out Tales from Watership Down, the sequel. Some things that were left out of the original story can be found in this follow-up, including a couple stories loosely referred to in the book, as well as some of the events between the climax and the epilogue from the original novel, which wraps up a lot of things quite nicely.
This story might be 40+ years old, but it still fills young minds with simply epic tales of cleverness, bravery, trickery, and ingenuity. Hazel's leadership, Bigwig's courage, Blackberry's intelligence, and Fiver's foresight are all things one can admire, even to this day.