On the XBox it basicly turns the XBox into a complete desktop PC. Hook up a keyboard and mouse via adapter and you've got a PC with a hard drive, 733 MHz P3 processor, and 64 MB of RAM. It can be used as a super cheap web server, or all kinds of stuff.
For the DS, when completed, it will turn the DS into a full fledged PDA. And you can switch to a DS game at any point.
I'm especially excited about the possibility of emulation. Emulation of NES, SNES, GB, and possibly Genesis and Game Gear games. I'm fairly sure Linux emulators exist for all of them. That'd be absolutely sweet.
EDIT: On the topic of DS wireless...good part, it's standard 802.11b hardware, it's just missing a TCP/IP implementation. That can be done in the software. Bad part, is that its Broadcom chips, some of which don't have Linux drivers. I can only hope
Fortunately Nintendo has announced a whopping 25 online DS games in development so I'm happy
EDIT 2: Woah. I found a recently released homebrew DS application that includes Minesweeper and a dsPaint program that looks very cool, the guy drew some very well done images. Gives an example of what DSLinux could do. The scary part? The application is called...
DarkStar.