They have nice little demo here:

I think they've improved on the experience you get in Google Reader a bit. I like the icon letting the user know you're offline and the desktop icon. Very nice, I like!

Here's what you can do:

"As long as I have an Internet connection, every change I make is saved to the cloud. When I lose my connection, I sacrifice some features, but I can still access my documents (for this initial release, you can view and edit word processing documents; right now we don't support offline access to presentations or spreadsheets - see our help center for details). Everything I need is saved locally. And I do everything through my web browser, even when I'm offline (the goodness that Google Gears provides). When my connection comes back, my documents sync up again with the server."

It's not enabled with all users yet, but I'm hoping that will I'll get in there soon. Also it's only available in English right now.

The race for desktop RIAs is heating up!