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Does this mean that I can't use the build in email on my (Google) Android to use my account?

Because if not, this is pretty awesome.

You can still use applications, such as email clients built-in to Android, to access your account. Typically you'll need to use an application-specific password as described here: http://www.google.com/support/accounts/bin/static.py?page=gu...

(Disclaimer: I worked on the Android app.)

It's not clear from that page, is there any limitation on the powers of the application-specific password? While it's less likely, if one of those passwords gets stolen can your entire account still be accessed including your account settings?

On Android, the device specific password is used for your phone's Google Account. Which means once you set it up, all Google apps like Gmail, GReader, Talk, Market, etc. will work as usual.

If you suspect your device password is compromised, you can revoke it from your Google account settings in a regular browser.

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