Google Web Sites allows you to organize your website's Web pages into categories.
If you have a series of pages (I wouldn't call them websites) about your favorite rock groups, you can put them all under a category "Rock Bands", and access tem easily.
You may control who sees the pages, and can have a family website that only members of your family can see.
The other Google tools you use can be integrated easily with your website. Google docs can be embedded in the site, for example.
Google Sites, are a website version of a blog. They are not stand-alone websites that can handle your own domain name, you must have them under the sub-domain, but the benefit is that Google does tend to capture the information in its services (blogs for example) faster than if they were elsewhere.
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