Live Locations (LL) is an Android service for finding your contacts.
Live Locations has two features, linked with each other.
The First feature is that LL ties into your phone via your GTalk contacts and the phones GPS service. When a contact sync request is made by your phone to google, LL will also update your location to the Live Locations Service, hosted on Google Appengine.
At the same time, LL's second feature will make a request to the service to request all your contacts (you have permission to recieve) last know locations. If they have LL installed, then your contacts screen will be updated with this.
From here, you can click on the location (similar to what you can do with their address) and a map will appear with this location shown. This means you can see where your friend is and find directions to them. Great for meeting up in unfamiliar locations.
The idea is not to replace the existing contacts manager, but to improve it by adding this location-based feature, so it can become a popular service by being unobtrusive.
In future versions you will also be able to make your position public via a web interface, and there are plans to look at adding additional services (Fireeagle, Brightkite, Twitter, etc).
The service runs on a Google Appengine backend.