Cool! That hasn't been mentioned yet. It's just a way to have your own web-based office suite. Instead of going to a Google URL for the apps, or even a site, you can transparently use their apps under your own domain URL. Same goes with email.
The "Google hosted" section is the whole bundle done at once.
The downside is that it's not very configurable, but if you love their stuff as is, then it's available. I like being able to tweak my domain, so I don't think I'll be taking much advantage of this feature.