Apple seems to have released a beta of Photoshop Express, a lightweight version of Photoshop. Many news sites tout it as a browser-based application and amaze how far browser apps have come over the years. Well, it is a flash-based application (and I agree that these apps seem to be amazingly good), but I think calling them browser-based gives a bit too much credit for browsers.
After all, the browser does nothing more here than offers the user a way to navigate to the application and download the bits over the internet. After that it is just a matter of running a local application on the user's machine. This has been of course possible in various forms for years already, in .NET terms we have been able to deploy native .NET WinForms applications with a technique called ClickOnce. And of course lately has been intruduced a platform neutral version of the .NET framework with Silverlight 2.0. I am looking forward to see all the similar "browser-based" applications that utilize Silverlight in a similar fashion as Photoshop Express utilizes Flash.
I guess all of this belongs to the category of RIAs, Rich Internet Applications, which means browser-deployable client-side applications and have almost nothing to do with the original HTML/HTTP -nature of web applications.