It allows users to chat from within Gmail. Google describes the new feature here. From the page:
Gmail learned to Talk. Now Gmail accounts are automatically enabled with chat
features. You don't have to do anything special, it just works. See when your
friends are online and decide for yourself how you want to get in touch with
them. Email and instant messaging don't have to be so different. And why should
you always have to remember whether something important was said over email or
IM? We've made it easy for you to save chats, so
you can search for them, print them, even reply to one over email.
Update: There's now an Official Google Blog post on Google Chat here. It doesn't really have any new information, it just talks about some of the usual Google idealism (genuine or otherwise) behind the project.