For appliances that are unable to connect to Wi-Fi, Google has designed an open wireless protocol that allows Android devices to talk to them. This protocol is designed to offer low-cost connectivity to everything electrical in the home (lights, alarm clocks, thermostats, etc.). Google wants to think of every single appliance in your home as a potential piece of the puzzle in this Android@Home framework, capable of working with Android apps.
The network is similar to that used by ZigBee, a low-power wireless network used for short-range home automation. The network will also be designed to allow for enough bandwidth to transfer video.
On the surface, Android@Home doesn't seem that new; technologies like DLNA have tried to integrate home appliances via a home network for years, with middling success. DLNA companies designed the protocols and integrated the technology on the appliance side, leaving client software and devices to integrate as they chose. Android@Home will provide a unified client as well as the protocol, taking the opposite approach.