PhoneGap, an open source framework. extends the HTML5 environment so that it can make use of mobile services and facilities in a platform-independent way. It's the easy way to create native apps using non-native code.
The big advantage of an HTML5 app is that in principle it can run on anything that has a compatible browser. Their big problem is that generally they can't make use of anything special offered by the platform they run on.
This is where PhoneGap comes in. It is a framework that extends the HTML5 environment so that it can make use of mobile services and facilities but in a platform independent way. The good news is that it is open source under an MIT license.
It takes the HTML5 app and wraps it in a runtime which handles the native APIs. Think of the wrapper as a sort of custom browser that runs you app and makes it look like a native app. There is a new service which will perform the "wrapping" in the cloud - PhoneGap:Build. This currently in beta and free but it could be used to provide some revenue in the future.
After a long beta phase PhoneGap version 1.0 has now been released and this makes it all the more attractive to base real mobile apps on. It currently supports six device types and app stores - iOS, Android, BlackBerry, webOS, Bada and Symbian. The list of improvements in version 1.0 include:
Overall API stability and “pluggable” architecture
W3C DAP API compatibility
Remote debugging tools
You can get a general overview from the PhoneGap promo video:
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