The proposed API allows Chrome extensions to access and control a sidebar panel - a per-tab split-pane HTML container to the right (to the left in RTL environment) of the main page content with the ability to resize horizontally.[1]
In short, it provides extensions an alternative to using popups or injecting HTML directly into web pages in order to display something to the user.
With it, you could for instance (re-)implement something like the old Side Tabs feature, which was removed from Chrome because the complexity of a tree-style interface in terms of usage is beyond what most users need or want, and in terms of implementation is more than passes the cost/benefit test for building into Chrome natively as an option.[2]
[1]: https://docs.google.com/document/d/102hfWTM5cMl-95PyfGcn89YH...
[2]: https://code.google.com/p/chromium/issues/detail?id=344870#c...