What is Windows? It's that thing, in the background, that lets you run all the applications you want to run.
But what if all your applications were written in Javascript and HTML, and had URLs instead of .exe files? With all the extra power built into Chrome, they could still write to file systems, store data, work offline, do sophisticated graphics and parallel processing -- these are not hypotheticals, this is what Chrome can do right now. We're just beginning to scratch the surface of what an app written from Chrome can do.
Chrome can be an OS, for some value of "OS".
When the iPhone was first released, development was restricted to web apps and they didn't have access to any API. The fact that it was javascript and HTML was mostly tangential to the complaints of people who wanted to install (and sell) local apps, with access to the unique hardware, though obviously existing Cocoa coders, 3D game programmers and anyone needing to get close to the metal weren't going to be happy even if these other elements were taken care of.
On the other hand "fart apps" and things that are basically light wrappers round existing web apps have no such problem.
See the Palm Pre for someone taking this to it's logical extreme.
I'm reminded of the time when Chrome came out and Arrington flipped: "z0mg it's a cloud operating system!1! the future is here!"