Looks like it's currently broken. The article says "You can activate it by hitting the ‘two-step verification’ link on this page[1].", but it's definitely not there.
However, if you go into "Authorizing applications & sites" it has a warning box which says "An application-specific password can only be created when you are signed up for 2-step verification.", with no mention of where or how that can be done.
It'd be nice if this feature allowed me to have secondary passwords for eg google talk. I don't much care for having to hand out my full credentials just to use things like bitlbee/meebo.