Google Apps is a service from Google for using custom domain names with several Google products, i.e., Gmail, Google Docs, Google Calendar, Google Sites, Google Talk, etc.
What is Google Docs?
Google Docs is a web-based word processor, spreadsheet, presentation and form application program. It's similar to the Microsoft Office Productivity Suite but can be accessed anywhere, anytime with any computer with internet access. It allows users to create and edit documents online while collaborating in real-time with other users.
Why use Google Docs?
The two main reasons to use Google Docs is for portability and collaboration. The portability is the anytime, anywhere and any computer. Google Docs lets you collaborate with others on a single document in real-time. It removes the waiting around to receive a document that you had wanted somebody else to edit. With Google Docs, up to 10 people can edit the same document simultaneously, redefining the whole concept of working together.