You get it, right? Google was smart enough to hold a crude conversation with me. It understood my questions, but more importantly it correctly identified the pronouns "he" and "her" as Jay Z and Beyonce. To do this Google taps into its Knowledge Graph that correlates massive amounts of data and finds relationships to terms such as Jay Z and Beyonce to find contextual meaning. Next, Google leverages its rich database of commonly asked questions, remembers your previous search query (so it can better answer the following question), and anticipates what your next question is going to be (via Google Now). And this is just the beginning, according to Google.
Not only does Google say the conversations will get better and deeper, but it will introduce voice activate search. With voice activated search when you want to spark up a conversation with Google (or search for something) all you have to say is "OK Google." That will trigger Google to go into search mode and listen for a query. Google says it's working on how to implement this "hotword" technology so the creepy factor of having Google eaves drop on us all the time won't be an issue. Good luck with that, by the way.
Google's conversational search is also location aware, so you can ask how to get somewhere and then where to find a good place to eat. When I tested those features Google choked. In fact, Google acknowledges things are going to be rough for a while, but promises they'll get better soon. In my example above when I asked about when Beyonce's next concert was, in the form of "When is her next concert?" Google displayed blue link results instead of a voice reply. Worse, the top link had nothing to do with Beyonce and was for the San Antonio Symphony. Huh?
In my tests I found the further along you got into a conversation with Google the more prone it was to flounder. The most successful "conversations" were asking predictable questions about well known people and places. But sometimes those didn't go well. When I asked: "What's the capital of New York state?" Google read back to me "The capital of New York state is Albany" I lobbed a softball next. "What's the capital's population." Instead of answering back, Google delivered normal blue links with the top result a site that listed states and capitals.
What Google says its striving for is a Star Trek-like search experience, in which a computer understands who you are, where you are, grasps what you want, and can answer back. It's hard not to get excited about what's next. Just be prepared for some bad small talk until we get there.