"Similar Images allows you to search for images using pictures rather than words. Click the Similar images link under an image to find other images that look like it."
The interface doesn't perform real-time image analysis, so you can't upload images. Instead, Google lets you search the web for images, choose one of the results and click on "Similar images". The results are surprisingly good and this is probably the most impressive feature ever released by Google Image Search.
Google also launched a new interface for Google Labs that categorizes the experiments, lets you sort the services by popularity, post comments and subscribe to a feed of the most recent services.