Without an internet connection, you'll be able to get turn-by-turn directions, see reviews of venues, and search for different places. Autocomplete in search works when you're offline too.
The offline functionality seemed very responsive in the demo. Google showed off the technology on stage at Google I/O using a phone in airplane mode, and it worked almost instantly.
Google said this feature will be rolling out later this year, but hasn't mentioned whether or not it will be region specific.
It may sound like a small update, but it's bound to make Google Maps much more useful. Imagine being able to look up directions while you're underground in a subway, or even on an airplane.