Well... good question and a simple answer. Gadgets powered by Google are miniature objects made by Google users / code developers or general google lovers like you and me. These codes offers cool and dynamic content that can be placed on any page on the web or your blog.
Examples of Google Gadgets are to-do list, currency converter, calculator, games, etc..
One can add these gadgets to their Google personalized homepage and, if they have Google Desktop installed, they can also add gadgets to their computer's desktop.
A complete list of Google Gadgets is available here
By adding these Gadgets one can enhance your own website/blog and also reach more people with your content. You can now use Google Gadgets to make your webpages even more interesting and useful to your visitors. For instance, you can add your city’s current temperature or a quote of the day to your own page. Gadgets can be quick and simple, like the countdown gadget which is really cute and simple