Gears is an open source plug-in that adds offline storage, a local database, asynchronous threads, and other features which could be used to create web applications that are closer to their native counterparts.
In the fragmented mobile space, Google bets on Android, an open mobile platform that includes a powerful browser and APIs that enable developers to create applications which take advantage of the connectivity.
Google App Engine lets you build web applications without having to worry about infrastructure, setting up servers and databases. Anyone can create a web application for free and pay for more resources, once the applications becomes popular.
Google APIs could be used to enhance web applications by integrating them with Google's services: you can get data from Google's apps or from the content indexed by Google.
Web Toolkit lets you use Java to create the front end for AJAX applications and translates your code into optimized JavaScript.
OpenSocial is an effort to make the web more social by providing a standard for creating social web applications.
Most of Google's solutions are open source software (Gears, Web Toolkit, Android) and steps toward creating standards (Gears, OpenSocial) that should move the web forward. Google says that its only incentive for building these tools is that enabling the development of more web applications brings more Internet users and, indirectly, more Google revenue. Some of that revenue is invested in other initiatives that fuel Internet's growth and the cycle continues.
Here's the full 90-minute keynote. Don't miss the cool Android demo at min. 26.