We have a lot of ideas for Gmail -- many come as suggestions from Gmail users, many come from people here at Google. But there's only so much we can do at any one time.
People often ask how we decide what to build next. It's usually a mix of factors, like how many users are asking for it (think delete button, vacation responder, and IMAP, among others), how useful we think it will be (think chat, conversation view, etc.) or how much fun it will be to work on (this is actually really important). We have all sorts of debates about each option, we weigh the pros and cons, and then some of the time we probably make the wrong decision.
Gmail Labs is a way for us to take lots of the ideas we wouldn't normally pick and let you all (who use Gmail) decide whether they're good or not. When you sign in, you'll see a new page in Settings called Labs. It has a list of experimental new features, and you can enable or disable each one. Some of the popular ones will become core parts of the product, and we'll eventually retire the ones that don't get much use. We've put feedback links in there, too, so you can discuss a feature with other users and the engineer(s) who wrote it.
One of the things that we like about working at Google is that it lets us have a big, positive influence and at the same time experiment rapidly, getting ideas to users very quickly. That combo of size and speed is something we care about a lot, and we've designed a culture and company that makes it possible.
The idea behind Labs is that any engineer can go to lunch, come up with a cool idea, code it up, and ship it as a Labs feature. To tens of millions of users. No design reviews, no product analysis, and to be honest, not that much testing. Some of the Labs features will occasionally break. (There's an escape hatch.)
The result of this loosely-directed chaos is 13 Labs features, with more on the way. Some of them we've found really useful, like Quick Links, which lets you save searches and any other views in Gmail. Kai and Julie wrote Superstars, which gives you different types of stars. Dave wrote Old Snakey, which lets you play an old school style computer game when you press "&". I'm just going to go out and say it: Old Snakey is probably a bad idea. But Dave wanted to do it, so Dave did it and anyone who uses Gmail can use it. And now you can help decide whether it's a good idea. That's the kind of thing that makes a project fun to work on.
(If you want to work on Gmail, too, we're hiring. But you need an Old Snakey score above 150.)
Update: Labs is now out to all English users (US and UK), and administrators using Google Apps can choose to enable Labs by checking the "Turn on new features" box in Domain Settings.