That Adobe and Google are working to bring Photoshop to the Chromebook as thin client computing is big news. It works just as how you might imagine: the Chromebook receives inputs and displays outputs; servers elsewhere do all the heavy lifting.
The cloud is going to be a big deal. Photoshop Streaming is one small step towards that future.
Ironically, image editing may not be the best app example to start with. It’s unlikely that pro users will find this solution good enough. Is that artifact inherent in the image or a flaw in the streaming? Is color reproduction faithful? Is the experience going to be fast and stable enough? I still find Google Docs unworkable for complex presentations and spreadsheets.