"A knol on a particular topic is meant to be the first thing someone who searches for this topic for the first time will want to read."
http://googleblog.blogspot.com/2007/12/encouraging-people-to-contribute.html
The project is not collaborative like Wikipedia, but for many topics, there will be competing knols on the same subject. The goal is to cover all topics, from encyclopedic topics to how-to-fix-it instructions. The control over the article will remain with the author, who can also choose to display ads and get a substantial revenue share. Most probably, the license won't be a free one, but "Google will not ask for any exclusivity on any of this content and will make that content available to any other search engine."
It's too early to say, but the success of Knol may spell extinction for projects like Citizendium: most "experts" would prefer to retain sole authorship of their articles and get paid for it.
And of course, it may spell doom for Wikipedia as well. Knol will certainly provide a more authoritative, more reliable source of knowledge than Wikipedia: http://www.google.com/images/blogs/knol_lg.png