Yeah, it's basically a way for developers to do something with the application without it having to run, since that's restricted.
Imagine an IM application. Normally it would run all the time and check for new messages every so often to display to you.
On the iPhone you can't do this, but with push you could have the app server check for IMs, then when it gets a new one it would send a notification to the phone and the phone would display this somehow, so you know to launch the app.
I haven't read much about it, so I'm not sure if you can actually launch the application itself with the notification, or if it would basically be a screen message or an icon change.
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