First, everything is saved in the cloud.
While with Amazon's Kindle you download a book to your Kindle, where it lives, Google's books live in the cloud (on the internet), so you can access them from any device, no matter where you are. (Start reading on a tablet, read more on your iPhone, and finish on your laptop. And if you're going off the grid you can download to a device.) Yes, if you're going off the wifi grid, you can download a book).
Second, the system is open-source. Google is gadget agnostic, and its e-book reader and bookstore will work on pretty much any gadget — any gadget except Amazon's Kindle. Today Google unveiled apps for Apple's iPhone and iPad as well as Android devices, so you can read Google eBooks on your Sony eReader or Barnes & Noble Nook.
Google's bookstore also goes beyond the typical recent releases and best sellers. It includes a host of scholarly journals, medical papers, and academic publications. Its pricing for the books it sells are pretty much in line with its rivals... and it's worth noting that Google has every single book publisher on board.
For the first time Independent bookstores will be able to sell eBooks using Google's storefront. If you're loyal to say Elliot Bay Books in Seattle, you can go to your favorite local booksellers web sites, take their recommendations, and purchase through them — they and Google both get a cut.
Google's advantage: not only does it know what books you're searching for, it knows your entire search history: every article you're looking for or RSS feed you follow. This is incredibly valuable for suggesting books you might want to buy. (i.e.: Like this New York Times article on bird migration? Try this non-fiction tome).
What does this mean for Amazon?