It makes perfect sense. For years, Google has been the search tool of popular choice, so why shouldn't they be in the browser business? The news on the Official Google blog says they will be joining the game with "A Fresh Take on the Browser".
The launch of Google Chrome promises to create an era of fresh thinking in response to the realities of Web 2.0. Even with tabbed browsing, most browsers run on engines created to take advantage of one web resource at a time. Google intends it's browser to be capable of multi-tasking, while handling the full range of evolving web applications.
Google's own comic book explanation clearly outlines the goals of the project, but I prefer the crisper version posted by Blogoscoped.com.
The beta release of Google Chrome is intended exclusively for MS Windows, but versions for Mac and Linux are promised. My fingers are crossed in the hope that Google Chrome will get us on track to use the browser as a powerful app, rather than a simple window to the web.
Late addition: Live Blog of the press conference/demo/launch says the code for this browser will be very open. If you're into that sort of thing, visit Chromium.
Later addition: It's available now! http://www.google.com/chrome
Image Credit: The comic book is shared by Google via Creative Commons attribution, non-commercial, no derivative works 2.0 creative commons license