Having only used it briefly since enabling this new Google Labs feature, I can say without hyperbole that it is 100 times greater than anything Google has ever done before! (Seriously, though, it is pretty cool.)
In the past, I have used my Gizmo client to send SMS messages but it requires the pre-purchase of minutes from Gizmo and it always felt a little clunky to me.
Gmail-SMS chat feels like a regular Gmail chat session, and it doesn’t require the purchase of any credits to send them (although it may cost the person your sending the SMS to — if it does, you should probably get them to upgrade their wireless plan).
From the Gmail blog announcing this feature:
On the receiving end, when you get a text message from Gmail on your phone, it will come from a number in the 406 area code. (The l33t folks in the crowd will note that this spells G0O.) You can reply to this text on your phone just like you’d reply to any other text. The reply gets routed back to our Gmail servers and shows up in your friend’s Gmail chat window. Each of your friends’ messages will come from a different 406 number so you can reply to any message and it will get back to the right person. Messages from the same person will always come from the same number, so you can even bookmark it in your phone.
If you haven’t already, I suggest you give this new feature a try. Very, very cool.