Google started rolling it out last night. Being a Labs feature, you'll have to turn it on in your Labs settings, not normal Gmail settings. To do so, got into Settings, then Labs, and enable it. Go into Chat, type in a phone number, and you'll see an SMS option.
While you could email a user and have it result in a text message to them (such as using the address email@example.com), that would only create a temporary identifier for that "session." A friend couldn't use that to text you back, at least "much" later. This feature adds the added convenience of giving them a permanent "number" they can text you back at.
The "number" will have a 406 area code. Once you use Gmail chat to send an SMS, that number will be associated with your Gmail account permanently. Your friends can then text you back and initiate SMS chats at that number.
Google lists it on its "What's new in Gmail" page but no official blog post anywhere --- yet.
Text messaging in chat (US phones only for now)AOL's Instant Messenger already supported SMS messaging in chat, so it's good for Google to play catch-up with this. For me, since Gmail is my email of choice (I redirect other email addresses to Gmail as well), it makes Gmail even more of a Swiss-Army knife.