Google Wave has been out for developers for a few weeks now, and I've been one of the fortunate ones to get a test trial of Wave. So far so good, but it's still majorly buggy.
Here's what Wave is, if you ask me: Email + IM + social networking + online collaboration + wiki + discussion groups + widgets, all into one interface, seamlessly integrated.
Why do I say seamlessly? It's because there isn't a separate screen estate for, say, chat and email - you do everything from one sub-window.
Here's a blurred censored screenshot of the Wave interface (you can see the video posted here, which was on day 2 of the Google I/O conference - I only watched 15 minutes of it and started to drool).
It can replace conventional email - not only does it have Gmail's threaded view (conversation view), it also has a contact list with which you add "participants" into your wave (recipients, in other words).
Now others can invite others (although I think in the future, this'll be an option later on to remove participants) so your wave can turn into a tsunami with a multitude of authors and what-not.
Look at the bottom-right: you see tags. There are also folders here - but they act as labels (as in, they're more like the "add label and archive" format, cause you can see them if you click on "All". History and Settings don't work (yet).
On the right hand side is where you see replies to your wave. You can reply normally by clicking on the reply button (or a keyboard shortcut) or have an inline reply (highlight some text, then press "enter" on your keyboard, or the "Reply" button in the interface) (not shown). There are apparently 3 types of replies: child, sibling and something else (I'll update this when I get the names of all three).
If both participants are viewing a wave (that is, if both are online) and one of them is adding a reply (or editing - more on this in a bit), they can actually see what they're typing - in REAL TIME! This means you can quickly answer what they're saying, without having to wait for them to finish (and edit your replies accordingly). There is meant to be an option to change this and show a message similar to "x is typing" instead of the realtime characters, but it's not on right now.
You can edit posts - yes, edit them. This makes it a perfect alternative to Wikis with a commenting system (for e.g., the first post will be the wiki content, and subsequent replies can act as notes/comments). Anyone can edit (right now) if they can see your wave.
You can have bots in your wave -for e.g., there's a "Swedish Bot" in Wave right now (not sure who made it) that automatically edits and posts your English message into a Swedish-accented messages (for e.g., "what are you doing" would become something like "vaat arr you dooing?" - I don't know the exact details, but it should suffice as an example). You've got bouncers in it too (for removing participants) and tons others. You can add gadgets/apps in Wave as well - for instance, someone started a chess game in a wave (and you can reply as a chat thingi).
But because this is a developer preview (translation: alpha, or pre-beta, or broken), there are bugs. The client's crashes seem to have reduced (the only way to report bugs is either on the specific link, or when the client crashes - the report a bug link doesn't work). You can't attach files via the menu (but drag and drop works perfectly from Windows). Groups aren't implemented yet (not sure if they will be) but you can have pseudo-groups in Wave - you add the participants manually (like a mailing list, in which you add 20 people instead of emailing one address). There is a way to make your wave "public", but that's different. Groups aren't always public.
I think that's alot of information. I'm not sure if what I'm doing violates the NDA or not (considering Google's already demoed the project) but I think this info should help put people at ease why Wave is the next big thing, which might put other services out of place (if this gets all it's bugs squashed out). I'm sure I've left out some info (such as the ability to use Wave on the iPhone almost flawlessly - I haven't used it, but those who have say so) so pardon that. If there's anything you'd like to ask, go ahead.
Edit: right now, they use HTTPS for everything, so it's a bit slow.