The concept behind it is based on the fact that the new age of web applications doesn’t really play nicely with your desktop, so instead of living up and playing nicely with the rest of your desktop application, web application tend to stack up in your tabbed browser (if you have one of those, if not, get one here).
What Bubbles does is to encapsulate your web application in a manner that will make it appear as if this is a standard desktop application.
It does that by hosting the Internet Explorer and operating it externally. A very nice trick.
I think there is an interesting opportunity for this type of application specifically due to the whole Google portfolio related rumors about having Writely as Word, Gmail and CL2 (Google’s Web Based Calendar) as Outlook, Google Base as Access (though I think this stretches it a bit more than what Google Base is actually is) and the mysterious GDrive to store all of the data up in one place.
If Google adds something like Bubbles to its Google Desktop product (or even in a different product), it can integrate seamlessly with Windows on the desktop making the whole Google Office suite (even though it lacks a few things like Excel and PowerPoint) almost native to Windows as Microsoft Office is.
Anyhow, try it out, send feedback and I’m sure this will eventually become a great addition to the desktop!