You don't strictly "download" or "install" web apps, Chrome's "installed" apps are glorified shortcuts. There is a Chrome store full of web apps. However, thanks the HTML5 and app caching, these applications will work offline.

That's not really true, it's more that installable apps can just be a glorified shortcut. The majority of apps that did that at launch of the store hurt them on that perception, I think.

Installable apps, like extensions, usually reside mostly locally and can have elevated permissions on some things: https://developers.google.com/chrome/apps/docs/developers_gu...

Well yes, that's true. They do have elevated permissions. I didn't know they resided locally though, I thought they just used cache manifests.