"The new Google document editor doesn't use the browser to handle editable text. We wrote a brand new editing surface and layout engine, entirely in JavaScript. (...) To you, the new editor looks like a fairly normal text box. But from the browser's perspective, it's a webpage with JavaScript that responds to any user action by dynamically changing what to display on each line," explains Google.
When Google launched an early preview of the new online word processor, you probably noticed that the only way to see the new version of the editor was to create a new document. All the existing documents were tied to the old editor and Google didn't offer an option to convert them. A Google blog post informs us that all the new documents will be created using the new editor:
"Beginning today and rolling out over the next couple of weeks, all new documents will be created using the new documents editor. Docs already created using the older editor will remain there. We will be sharing more information on how to move those documents to the new version soon."
The problem with the new editor is that it lacks many features that were previously available in Google Docs: translation, editing CSS and HTML, document settings, custom dictionary, comparing revisions etc. These features will probably be added to the new editor, but users expect to find new features in a major update, not missing features.
Another issue is that most documents will open in the old editor, while recent documents will open in the new editor. Google will offer an option to migrate the existing documents to the new format, but users shouldn't have to deal with converting between formats.
The new document editor should have become the default option when all the features from the old editor were implemented and all the existing documents should have been converted to the new format. Meanwhile, you can still create documents using the old editor if you use this URL: https://docs.google.com/?action=newdoc.
Also notice that the two document formats (Writely and Kix) have slightly different icons:
