Google has some pretty neat things. Its more than just the products, but its the archtiecture. They often are on the forefront of putting applications out there that no one else has done. Google Apps Engine is no different.
Remember my post about SOA, well this is it in a nut shell. Other people have SOA apps, but not against the computing power that Google is unleashing.
All in all, its not much different than any web hosting service, except for the fact that you have access to the whole google computer farm! Whoa! now that's a spicy meatball.
Man-o-man! - Tried signing up for the open source, but it was gone in a few minutes. After the initial signup, I read that the load on the system caused slow downs, which is probably a product of it being in a beta.
Entrepreneurs can use this app engine to build their systems without having to buy a lot of infrastructure. This frees up money for more R in the R&D.
From a testing perspective, I would definitely need to play with it to understand what they are doing. I read some of the docs to try and figure out what it does, but playing is what will tell me the most about the application.