Project Fi works by selecting the best of several options to provide connectivity. If available WiFi is better than LTE it will select WiFi. If one LTE provider has a better signal than another, it picks the one with the best signal. Currently it works with T-Mobile and Sprint and a Nexus 6 phone. Right now it's available by invitation.
One of the interesting side effects of this paradigm is the seamless transition from WiFi to cell networks and back. Also, your phone number “lives in the cloud” – you can use your number to talk and text on your phone, your tablet or your laptop from wherever you are. So you leave your phone at home, you can still connect using your laptop or tablet – or another phone.
The pricing model is interesting – you pay $20/mo (talk, text, WiFi, international coverage) plus $10/GB/mo, but you only pay for the data you use.
For much more info see: https://fi.google.com/about/
I'd be interested in your feedback if you're one of the people who signs up!
Thanks to Ken Gerke for the blog suggestion!