Just a few days ago I found this quite impressing website: http://eyeos.info/
They offer an operating system which is completely running in your browser. It includes all basic applications you can think of (Office suite with text writer, spreadsheets and presentations, calendar, contact manager, calculator, email application and some basic games)and has the possibility to upload your local files to your online desktop.

Wikipedia describes it as follows:

eyeOS is an open source web desktop written in mainly PHP, XML, and JavaScript. It acts as a platform for web applications written using the eyeOS Toolkit. It includes a Desktop environment with 67 applications and system utilities. It is accessible by portable devices via its mobile front end.

In eyeOS, you can drag around windows, use the desktop as you are used from Windows, Linux or Mac OS X, and even drag & drop of files is possible. So actually you don’t even recognise that it’s all based on JavaScript and running in your browser.
Even a task manager is included, showing all running tasks and the option to terminate them.

On the official website, it says:

eyeOS is a new kind of Operating System, where everything resides on a web browser. With eyeOS, you will have your desktop, applications and files always with you, from your home, your college, your office or your neighbour’s house. Just open a web browser, connect to your eyeOS System and access your personal desktop and all your stuff just like you left it last time.

On the website, you can download the complete source code of the project, and a tool called eyeSync to syncronise files on your local computer with your eyeOS desktop.

All in all, I think this is another step towards applications running entirely in the internet, and extends the services Google provides with Docs & Spreadsheets and Microsoft is going to publish soon with Microsoft Office 14.