As I was watching one of the Google videos yesterday, waves is a replacement for the current e-mail. Google says email is a conversation happens between 2 persons and if it has to be forwarded and another person, it takes considerable effort and a person can not see what the other person is intend to convey until he sends the mail. Sometimes both may be trying to convey the different things and the whole content will not be in any single mail. It will be distributed and it is difficult to track the actual subject or intent of the mail when many people join the e-mail like cc or bcc.
Wave is a real time online communication system from Google which allows any number of users to participate in a discussion at a time. The users can type the content in a window and allow the required people to join in the wave. Everyone one can view the content at the same time, even when a person is typing the content. it allows more the one person to edit the wave. So the complete subject will be in a single wave and there is no need to track it again.
Here are some of the videos from youtube on how to use it.