I think convenience is the keyword. Users (not us HN crowd, the rest of the world) don't want to struggle with installing software, most of them don't know the difference between Internet, Browser, or "app".

They just open up "internet" and work on docs, and for 99% of the cases Google Docs works fine despite running in a browser that is much less efficient than a native "app". For most cases it's more than enough for the regular user who is used to "computers being slow" anyway.