Etherpad uses a different approach: they ship all the edits to all the users as soon as they happen, and each client processes them to produce an updated document. The hard part is making sure each user is seeing the same thing. This is easy with the Google Docs model where a single master copy is regularly rebroadcast. To do it the Etherpad way, without a master copy, is extremely hard. From what I've heard about what they had to do, it sounds like one of the more impressive hacking achievements by a YC-funded co to date.