Its complicate to explain.
Premièrement, it's an opensource communication protocol made by google. They will distribute an API that anyone can modify an publish on the web.
Its a realtime communication protocol. If you time an email and the receipient is online. He can view in realtime what you type (letter by letter). You can drag and drop picture from your desktop to your browser to publish them (it was in developpement at the time of the video).
You can create a text that all your friends can modify at the same time and everybody that modify it (or that is online) view modifications in realtime.
You have playback of communication. If you create a discussion with somebody, you had replies and blah blah, you can review all the sequency of the discussion message by message. When you add a contact to the discussion, this person is able to view the playback of the discussion.
You can add google map window and add text polygon etc. The person that you added to the wave see live, what you do on google map. (Zoom, text, polygon, etc)
There is a live traductor. As you type the text, the text appear itself in another language.
Look at the video, its just awesome. Don't watch it completly, but watch it