As you see, there is a lot going on in this interface. As Google describes it:
"A wave is equal parts conversation and document. People can communicate and work together with richly formatted text, photos, videos, maps, and more.
A wave is shared. Any participant can reply anywhere in the message, edit the content and add participants at any point in the process. Then playback lets anyone rewind the wave to see who said what and when.
A wave is live. With live transmission as you type, participants on a wave can have faster conversations, see edits and interact with extensions in real-time."
For a complete rundown, I would recommend visiting the "About Google Wave" page. Also, if you have time, I would encourage checking out the video below in which Google Wave is demonstrated. The video is lengthy, but incredibly interesting.
This looks amazing to me, and seems to take a greater step toward faster, more manageable online collaboration. You can try to sign up to "know when Google Wave will be ready" at this page if you're interested.