The custom 404 widget will suggest a working URL that's most similar to the one the user had tried to access (i.e. fixing something simple like a forgotten backslash, or missing end parameters), as well as site search query suggestions and a search box, if applicable. Other options include a link to the parent subdirectory or a link to the sitemap.
The Webmaster Central team cautions that not all features will be available to all Webmasters from the onset, however. "This feature is currently experimental," says Sahala Swenson. "We might not provide corrections and suggestions for your site but we'll be working to improve the coverage."