Here's a good analysis of what Google's up to.
They use a cloud-computing model, so you don't need to store your books on your device. Their books will run on every e-device except the Kindle, which I find interesting: Is this Amazon fighting Google or Google trying to crush Amazon?
Google comes into bookselling with a few huge advantages: They own massive mountains of data about everyone who uses the internet, and they have been scanning and sharing books for years now in a way that looks very much like piracy, but they have the money to successfully fight legal challenges. So they own massive mountains of ebooks ready to give you for free. Clearly they've been preparing for this for years, despite their denials during the legal challenges to their book-scanning efforts.
The NPR commentator this morning says that ebooks will be 85% of all book sales in 10 years. Google wants a piece of that pie!