Its like a combined chat/discussion application that shows you new entries as they are being typed. Users can all edit other's posts ('blips') so multiple people can edit the same body of text. You can easily add images and video to blips. There are also extensions you can add to your waves to give them new functionality, like posting to twitter directly from a wave. You can playback a wave so you can see the changes to it over time. In reality playback is insanely slow.
There are actually many more features to it.
Its supposed to give you a faster real-time way to communicate, but in reality there seem to be few people online at any given time even in waves with many users. If many people are in a wave at the same time or after a wave has reached a certain size, its really slow even if you have beefy bandwidth. The dream of fast, up-to-the-minute multi-user communication isn't quite there yet.
