From Google PR:
In our ongoing effort to create innovative technologies that enable users to search more of the world's information, Google today released an experimental search service on Google Labs called Google Suggest. This new web search service suggests queries as a user types what he or she is looking for into the search box. By offering more refined searches up front, Google Suggest can make searching more convenient and efficient, because it eliminates the need to type the entire text of a query. In addition, the service can connect users with new query suggestions that are useful, intriguing, and fun.
Google Suggest is similar to Google's "Did you mean?" feature, which offers users alternative spellings for a query. But, Google Suggest works as the user types in a query in real-time. For example, if a user types "bass," Google Suggest might offer a list of refinements that include "bass fishing" or "bass guitar." Similarly, if a user types in only part of a word such as "progr," Google Suggest will offer query refinements such as "programming," "programming", "languages,"progesterone," or "progressive."
Suggested queries are displayed in a drop-down menu below the search field and users can scroll through and select queries using their keyboard arrow keys. Google Suggest draws from a wide range of information, including the aggregate popularity of Google.com searches, to predict the queries and URLs users most likely want to see. An example of this popularity information can be found in the Google Zeitgeist. Google Suggest does not base its suggestions on the searches of an individual user or searches conducted from a particular computer or browser.