"In conversation mode, simply press the microphone for your language and start speaking. Google Translate will translate your speech and read the translation out loud. Your conversation partner can then respond in their language, and you'll hear the translation spoken back to you. Because this technology is still in alpha, factors like regional accents, background noise or rapid speech may make it difficult to understand what you're saying," explains Google.
The conversation is supposed to be fluid, but you still need to confirm that Google's voice recognition system worked well and tap the "Reply" button to switch roles. Here's a demo that shows the new feature in action for English and German: