We've kind of come full circle, again. When I was in junior high, the kids who messed with computers used a terminal that connected them to a mainframe somewhere -- probably a university. The terminal was "dumb;" all of the programs were installed on, and ran on the mainframe.
When the desktop revolution hit (the Apple II in 1977 and the IBM PC in 1981) applications moved off mainframes and onto your own personal computer.
This was a revolution because it let us worker faster, freer and more conveniently. You didn't have to book time on a mainframe, sit dumbly at your dumb terminal waiting for the mainframe to carry out the task and otherwise be beholden to some other entity.
Then the Internet took off. At first we just hyperlinked from one document to another. It was neat, but a little limiting. As bandwidth increased and browsers became more sophisticated, people started developing programming languages that used web browsers as sort of an operating system.
(Anticipating this caused Bill Gates to freak out. He saw the potential for web browsers to replace operating systems (like Windows, for instance) and take over computing. That eventually led to the Microsoft-Netscape browser war. Netscape clearly lost, but it's still not clear that Microsoft won).
That all led to web apps like Zoho, Gmail and Google Docs, Facebook. and what's often called Web 2.0.
This could be considered a return to the old terminal and mainframe idea, but it's a lot better. For instance, your computer (even a netbook) has a lot of processing power. That power works with the online service to give you better features, like speed, universality and the ability to collaborate with other people.
If you early-adopted any of those web services, you probably noticed a couple of inconveniences. For one thing, there was often a time lag between when you did something and the server side responded. You were also out of luck if you couldn't connect to the Internet.
You may not have noticed, but your browser was probably getting bloated as well. It needs plugins to run the apps and when you get enough of them running, plus have a few pages open, your system can get sluggish.
These issues led people to start thinking about running the web apps more from your computer and without using the entire browser.
Mozilla, the developers of Firefox, came up with web runner, which is now Prism. Adobe developed AIR.
As all of this integration between personal computers and the Internet was happening, there was something else going on. Mobile phones were becoming small computers with constant connections to the cloud. (And some computers were becoming a lot like mobile phones with a bigger processor. Netbooks, for instance, and now the iPad).
I use a lot of web apps, especially the Google ones, but I also fall back to regular desktop programs fairly often. For instance, if my internet connection is shaky, or I need to quickly take a few notes, I'll use OpenOffice or Tomboy. I's also found that the web apps, good as they're getting, don't offer all of the features, or the reliability, that I can get on my desktop.
Formatting documents is a good example. If I want tab in, uses images boxes, or include other, even slightly sophisticated, layouts, it's a lot easier in OpenOffice than in Google Docs.
Still, it's great to have the options.