PDF files abound on the web, and are most commonly used for documents that were designed to be printed (scoot over to the Australian Taxation Office site for some examples if you've never come across this practice) and sometimes for scanned copies of paper documents.
Historically, PDF files were downloaded and opened in an appropriate application, or a browser plug-in was used to display them. More recently, browsers such as Safari have provided integrated PDF support, and that's the direction Chrome is taking.
According to John Abd-El-Malek, a software engineer at Google, "we've built in an additional layer of security called the 'sandbox' around the Chrome PDF viewer to help protect you from malware and security attacks that are targeted at PDF files."
It's not surprising that Google has chosen to sandbox PDFs - PDf and other media files have been under heavy scrutiny by those looking for vulnerabilities in popular software. And a malicious PDF file was part of the late-2009 'Operation Aurora' attacks on Google and other US companies.
PDF support will be included in the stable release of Chrome once "more polish and features" have been added, said Abd-El-Malek.