The idea is just to make it easier to be able to use Google apps if you wish to.
You can think of it as having office applications on line such as calendar, word processor and mail.
You might decide to make a subdomain to use google apps so that something like office.example.com would be where you base google apps from.
You can have something like start.office.example.com as your start page (like a Yahoo page with news, finance etc added in). Your friends or co-workers could be given a separate account allowing them to log in to your start page and have their own 'google apps' and email and even share a company/group calendar and work on collaborative documents and web sites.
There is also a web-builder page so you can create a web-site if you wish to point to office.example.com or webpage.office.example.com (In all cases you can also use the offered Google default URLs if you wish to).
The domain is still hosted at DreamHost but the Google Apps activities are 'pulled' in from Google.
If you have used Gmail before you will know it is normally set up account by account. But as an 'administrator' of your own google accounts you can set up many many gmail accounts easily.
If you do not want to use it you do not have to so just deselect the option.
DreamHost have just gone the extra step by getting the happy DNS robot to set up all the DNS settings for you.
Have a look through the Google pages here.
Opinions are my own views, not DreamHosts'.
I am NOT a DreamHost employee OK! :@
Act on my advice at your own risk!