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Online isn't the same as "available". A green dot in GChat means actively saying "you can interrupt me". A red dot means "this better be important". Currently about 2/3 of my GChat list is "away".

There's a whole world of etiquette here that they're throwing away.

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I think they are trying to move more towards the long-lived conversations, where it shows you if the person is there and willing to be interrupted (the green bar), or they simply are not necessarily there to answer right now (because they are away from their computer, or they are in do-not-disturb mode). I realize that this is missing the middle "busy" state, but I don't really think that's a big loss. It used to be that when you sent offline messages it would end up as an email to them. Now when you send messages and they aren't in the online mode you can just assume that they'll see the message at the time of their choosing and respond then.

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