Google's specialty has been navigating through the seas of unstructured Web data that comprises the Web and making sense of it. Squared shows that they understand enough about this data to (semi-) automatically return it in a structured form.
Structured data on this scale is considered a bit of a holy grail, especially from the POV of Semantic Web advocates. The cornerstone of the original Semantic Web vision was to have web developers manually annotate semantics into their HTML sites. Now they don't have to.
The real value of Squared is the ability to query this data via an API. Arguably, Freebase already provides this capability, so the value of Squared is questionable, but presumably, Google is more automated and up-to-date or at a larger scale. I'm not sure -- maybe somebody more well-informed than I can comment.
I think it takes a search and is smart enough to give you comparisons between results. Look at their examples to get a feel for how it works.
I could be wrong, someone let me know if I'm completely off base.
What does "color" refer to here? The island's flower? What colour is melemele?
I should point out, I get what it does technically, but I'm just struggling to think of a repeatable user scenario where this would be useful...
I also noticed a couple of weird things:
1) They're not URL encoding their example searches. Tsk.
2) Searching for "google squared" on regular Google brings up Techcrunch, and the Google Squared site is halfway down the list.