It works, but there is a lot it can't do, and a lot of things that actually make it slower on poor connection (full page refreshes etc).
It's also interesting to note that it's a different version of the app, as is the tablet and mobile version.
A lot of people would have you believe you should have one version that fits all, easy to do for a basic website, un-feasable even when your a company the size of Google.
Mobile web version of Gmail is a very stripped down version actually. Thankfully so, but notice that even Google could not take its full-fledged Gmail app to the tablet browser (I don't expect it on a smartphone anyway).
In other words user don't get the fuller experience of web like they do on desktops. And that's exactly the point of this thread.
These things are required to make an attractive app. If HTML5 can't hack it and native apps can, then HTML5 is a failure.