Apollo is for developing desktop internet applications using mainstream technologies including, HTML, Javascript, Ajax, Flex and ActionScript.
Apollo is something akin to Java for the desktop. Apollo is a cross platform runtime aimed more at RIA (Rich Internet Applications) where as Java is more broad in its functionality.
There is a well established after market to run Flash desktop applications that can interface with the operating system. Zinc is an example of many products meeting a wide variety of needs. Because Flash is an internet downloaded program, its security sandbox prevents direct interaction with the operating system. The third party products provide a operating system wrapper the user approves for installation. The wrapper provides the same interface Flash has with the web browser. The web browser is a wrapper however also constrained by internet security expectations and as such cannot control the operating system.
Thus Apollo will knock a dent in the sluggish and IMHO boorish Java client and as well the dated cumbersome Microsoft desktop UI solutions.
Apollo runtime will be free. Adobe will likely provide a development tool to purchase. Or more likely it will be simply an extension of the Flex Builder tool.
The development link is at Adobe labs.