Basically, what you have here is an improved, refined and evolved Sega Master System controller. Sega improved the ergonomics by rounding off the square edges and making the controller more comfortable to hold. They added one extra action button, plus a start button. The control pad is also made to be a little bit more like Nintendo's cross shape, but without being too obvious about it. Again, as with the Master System, the controller's connector is still nearly pin-for-pin compatible with the Atari 2600.
Released in 1989, the Sega Genesis didn't catch on right away. Once the Super Nintendo was released, it looked like the Genesis might become another Master System (1/10th the sales of the NES), but miraculously, as time went on sales kept picking up until both systems each had about half of the market.