Complete story here. Unlike facebook which allows APIs built within the canvas, OpenSocial provides a list of APIs that assists in building social networking applications on the web. The three common APIs define profile Information (user data), friends Information (social graph) and activities (things that happen, News Feed type stuff). According to google, users will also share money with Google. But the details are not known.
OpenSocial goes live recently. Check it out: http://code.google.com/apis/opensocial/
p.s. Why not another facebook? Simply because google already has orkut.