Google Android has three main features for develops:
Integrate – lets you use existing Google code, such as Maps, and share data, for example between the browser and Google Maps.
Extend – lets you build on existing Google apps, such as Google Maps, and enhance their functionality. The example shown lets you use Google Maps to locate taxi cabs near you. The app uses the built-in Google Maps app and extends it, adding its own functionality on top of Maps to create a brand new app.
Replace – you can easily replace components. For example, if you don’t like the existing contact manager, you can replace it with a different one from a third party. Not just add a new contacts manager, but completely replace the default one that Google provides.
This makes developing apps much easier, and should let the end user customize their phone to the n-th degree, and get access to a rich ecosystem of new apps that will constantly be developed.