They didn't seem to really be talking about App stores per se, more about 'native' apps vs browser apps. I still think that native apps will be prevalent for some time yet, especially were performance is an issue which is often the case with mobiles. Many newer applications, which have only become a possibility because of hardware advancements, require higher level of performance as well. For example I don't see real-time video based 'reality overlay' applications running on your mobile browser soon.
It is really much more pleasant to use an iphone app rather than an in browser app. Not only is the appearance far better, but, I don't have to wait for a button to load. It's there already and I can push and wait rather than, wait, push, wait.
Part of HTML 5 that Google and others have been pushing is the ability to run browser based apps offline (think Google Gears), where the browser is basically a rendering engine and javascript sandbox, rather than a means of accessing remote resources. This is what they are referring to here.
