Here is what I think is the best overview and explanation of Apollo to date. I myself have struggled to fully understand what Apollo is, what it will be capable of and how it will help me as a developer. This Breezo sums Apollo up very nicely. You should seek about 15 minutes into the presentation if you want to go straight to the Apollo content.
Exciting times ahead! I love the idea of being able to build desktop apps using web technologies - maybe that's because web technologies is all I know ;-)
I feel overwhelmed, in a good way. Not only are we being handed Flex2 and Flash9/AS3 but Apollo is also scheduled to be released for preview on Labs later this year(!) with a version 1.0 out in 2007.
And who knows, maybe Adobe is working on FMS3. And if they are I would bet they will add AS3 support. One can wish.