From the horse's mouth:
Widgets are client-side applications authored using Web standards. They are downloaded and installed on a client machine or device where they can run as stand-alone applications outside of a Web browser. Examples range from clocks, stock tickers, news casters, games and weather forecasters, to complex applications that pull data from multiple sources to be "mashed-up" and presented to a user in some interesting and useful way.
The format is a basic ZIP archive, allowing DEFLATE compression only and W3C signatures. There is an XML document
/config.xml that acts as the manifest. It can nominate a start file otherwise
/index.* is used. Various icon formats are allowed. SVG has a lot of prominence. The widget can run in several screen modes; I guess they have some connection with HTML 5's
canvas element, but I missed any text about this. There is a hook mechanism called
feature with which Widgets can access arbitrary runtime APIs.
There is quite a lot off attention paid to localization, to allow widgets in multiple languages; there is a disclaimer that
it may disappear. Bundled resources make it easier to bring a stable or centrally-managed resource up to scratch for international use; however, where the resource is evolving you don't want to the internationalization to be out-of-synch.
The drafts looks good and the idea certainly is good: the main one is now at Candidate Recommendation stage.
It will be interesting to see how big a widget can get: can it be a full word processor? And what makes widget so different from applets apart from no Java?
One aspect that particularly interests me for any new XML-in-ZIP-based standard is whether it conflicts with the other ones: I don't see that the Widgets spec does conflict which is good. But if it does not harm, it does not good either, as far as promoting convergence is concerned.
If we ever see an XML-in-ZIP standard that can be used to harmonize ODF, OOXML, Widgets, JAR/WAR/EAR, IDML, SCORM, etc. it won't be suffering from premature standardization.
(I note that they give the wrong spec for RELAX NG: they use the Compact Syntax which is officially available for free on the WWW from the public ISO site.)