Basically, you have a little device that looks like a cell phone. It searches for wireless networks, connects to one if available, and then uses it to make calls using Skype. More people should use Skype. Calls to anyone who is online are free (as is always the case with Skype) and those to normal phones are cheap (two cents a minute to Canada, from anywhere in the world). For those in the UK, there is a deal right now: a Skype WiFi phone, a wireless router, 900 SkypeOut minutes (to call normal phones), and a year’s worth of voicemail for £99 ($230).
Not having to use a computer, and being able to use the phone anywhere there is a wireless network are pretty excellent features. Of course, the real fun will begin when somebody makes a combined device that can access GSM cellphone networks at times when WiFi is unavailable, but otherwise routes calls through Skype.