"Today, most of what we use on the web for on a day-to-day basis aren't just web pages, they're applications". With this introducing sentence, this is clear that Google gets it and has high hopes for the browser: they have built GMail, an entire online Office Suite and many more rich web applications and they desperately need to be able to expand them and make them run as smoothly as possible to compete with offline applications.
The online rich application market is still fairly new and Google needs to stay on top of the game if they'd like to be the dominant online application provider. Google has conquered the web with their search engine and their advertising system. If you think about it, what else can a web company hope for ? Just replicate the offline software market and bring it online, evincing a prestigious competitor such as Microsoft as a bonus.
This is where Google seems to be headed: build an operating system running on a web browser and whose content directly comes from the web. Just imagine how crucial a "task manager" is to an operating system and see how this has been included to Google Chrome. Now add a little bit of file system access and threading through Google Gears, which is provided in standard with Google Chrome, and you're awfully close to a fully functional operating system. Let's see if that is where Google is headed... but the future is bright regarding to browsers competition!