As they describe it:
Similar Images allows you to search for images using pictures rather than words. With the similar images feature, most images have a link below them that lets you find other images like them. There's no need for you to refine the text of your query. Your new results will be tailored based on whatever image you select. So if you see an image you like but you're stumped on how to describe it, just click the similar images link to see "more like this."
It's great for queries with multiple meanings (jaguar), comparison shopping (hairstyles), or just browsing (New York).
Here are the results of my test drive.
I searched "archaeology" and results did vary, but all were related to archaeology. The first image was of Indiana Jones (the character was an uber-looter), which was bothersome to me, but I know how it got there. Anyway, there were quality archaeological images. I clicked one from a meso-american site and voila, a slew of meso-american archaeology images. Absolutely great results.
I dug deeper and clicked "similar images" for a pottery shard within the archaeology results. It did NOT result in more pottery shard images. The results varied a lot. Some archaeology images, but more were images from related fields like paleontology and geology. I did notice there were some images not in the least related, like a few pet pictures. Those not related had similar color schemes. I assume color scheme is a factor, which may be good at times, but can really throw the results off as in the this scenario. Maybe searching for pottery shards was asking a bit too much. FYI: I did find great results when I did a top level search for the words "pottery shard," but I could have done this in Google Images which showed the same results.
So, although not perfected it is a useful option to searching images on Google. I look forward to future versions of this Google Labs product.
FYI: This is what a pottery shard looks like.