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Yep. It'll run within a Webkit frame on Mobile.

FTA: "if a mobile app requires installation, they will be sent to download the app from the App Store or Google Play".

This would lead me to believe it is going to run like some existing iOS apps, such as Bejeweled 2. If you click that menu item from the Facebook iOS app, it will launch the Bejeweled application instead of running inside any FB container.

Performance would then be similar to a native app or similar to running on the mobile browser?

If I remember correctly, iOS Mobile Safari performance is significantly worse within App Store Apps, possibly a deliberate restriction.

Mobile Safari performance is absolutely worse than a native app. That is why I'd like to know how the HTML5 apps running within a webkit frame in the FB app will perform. If the answer is similar to a native app it would allow HTML5 apps to 'code once and deploy everywhere' within FB's apps. Which would be f%$&ing amazing.

I suspect however the answer is that they'll perform simliar to Mobile Safari, which as others have mentioned has some pretty severe limitations for all but the simplest HTML5 apps.

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