Essentially, the Jetspeed j2o Desktop mode combines Jetspeed server-side portal services with client side ajax services. Traditionally, Jetspeed has been a server centric application where every request is processed by the server request pipeline. In Jetspeed j2o desktop the page aggregation is controlled by the client services. This makes for a pretty sleek client experience. The Jetspeed j2o implementation significantly leverages the DOJO library and essentially implements a client side JSR 168 compliant portlet rendering engine. Some screenshots are enclosed below.
Jetspeed-2 Desktop View

Jetspeed-2 Desktop Portlet Drag and Drop

Jetspeed-2 Back in Normal Portal View
Users can switch back to the traditional Jetspeed view:

For more details, read Steve's post on the Jetspeed-2 dev list. Great job from the jetspeed team!