So there's no presence/status notifications? I'll miss that when this hits GMail.
This just tells me that they want the Hangouts app to be straight up texting app as opposted to an instant messaging app (like Gtalk). No obvious feature of seeing people online and no concept of a "buddy list."
Inside the conversation, if someone is faded out then they are not there, but an unfaded image shows when they are currently in the conversation.
There's a whole world of etiquette here that they're throwing away.