Google Chrome Frame lets web page developers specify that their page would really prefer to be rendered in Chrome rather than IE. Once the plugin is installed, the author of a web page can specify that IE should use the Chrome Frame plugin by putting a single tag into the top of the document:
<meta http-equiv="X-UA-Compatible" content="chrome=1" />
If some other browser is in use, or if the user has IE with the plugin not installed, the page renders just like it normally would. If, however, the Chrome Frame plugin is installed in IE, the page is rendered using the Google Chrome engine even though it's still within the IE application.
This sort of browser-in-browser solution could be great for developers that want to support IE6 users without having to deal with IE6 quirks. They'd just add the tag to their site and tell IE6 users that they'd be supported only with Google Chrome Frame. (IE7 and IE8 aren't as problematic, so most developers can build a site that supports them with or without Chrome Frame.) The biggest problem I see is that many IE6 users are dealing with locked-down systems and won't have the authority or ability to add the plugin. If they could do that, they'd also be able to upgrade their browser!