It's whichever local stores agree to partner with Google. As far as I know, the process works like this:
1. Google partners with a store. They place some subset of the inventory of that store online.
2. As a user, you browse that inventory and buy.
3. The store receives the order, places the item into a storage bin in the back and waits for a GSX van to come pick it up.
4. Every so often, a GSX van will swing by, pick up the goods, then deliver.
Yes, you can get books. As far as I know, the only real product you can't get is fresh produce. I think produce has far too low of a volume-profit ratio (and of course, produce spoils if left sitting inside of a hot van for hours on end).