It's intended to run on portable computers that are basically connected to the Internet 100% of the time. Instead of having a word processor you write using Google Docs (or microsoft office when they get they're free online version rolled out). All of your stuff is saved on the Internet so it's available on any other computer that can connect to the Internet and if you destroy your laptop you won't lose your data.
The drawback is that you need an Internet connection to really use it. So if I'm sitting on a train with my laptop and no Internet, I would be able to (through google gears) type up a paper and read saved email and that's about it. There's also the fact that at the moment you can't run any of your own software (and the reason I have no intention of using this OS). Because of the way they're going about achieving their goal of no spyware and no updates, you probably won't be able to ever. Of course, that's where web apps come in and then can definitely fill in some of the gaps.
But there are no Internet equivalents of a lot of software, and in some cases, putting certain kinds of software on the Internet probably wouldn't even be possible.
This OS is great if you've got a netbook you carry around campus or starbucks or whatever and watch youtube videos and write papers on. Because they threw out a lot of the basic concepts of an operating system they threw out a lot of vulnerabilities. You won't get viruses or spyware anymore, basically the only thing you've got to worry about security-wise is phishing sites and browser exploits. You'll get great battery life because your computer isn't running tons of useless services.
I'd just put chrome on a separate partition and use whenever you all you feel like doing is checking your email or watching youtube. If you feel like actually being able to run programs, access your files, change out the music on an mp3 player, watch a movie on your external hard drive, etc, I'd load another OS.
This is the prerelease (the official release will be in another year), so it's possible it could all change by then.
