<buzzwords>In short, it's an expandable real-time communications/collaboration mash-up.</buzzwords> Basically, you create threads (called Waves) that you share with other people, and in these waves you can hold conversations, collaborate on work, or use one of several dozen widgets (including several games) that have been written for the occasion. There's even a Twitter bot for those of you who think the two should be in bed together.
That depends on how Wave performs in general audiences. Even with the expanded number of users Google has in the preview over the developer's sandbox (which I was also a part of), you'll notice that the majority of users are technically-inclined or heard about it from someone who is. There's a little more optimism among those types of crowds, as I'm sure you'll agree.
Well, considering how it extends and improves email, I can't see how it can possibly fail.
I am certain you'll be able to send email into and out of Wave too -- through some kind of robot, of course. It's just a sandbox at the moment, as you say, so you have to use your IMAGINATION to begin to see what this could turn in to :)