Summary document posted here. I'm hoping to add more to that document in the near future. This feature is especially handy if your organization uses Kerberos to authenticate users on the intranet. Previously, this meant that you would only be able to use IE.
Since Mozilla 1.7, Mozilla has supported Kerberos on Unix-like systems (including Mac OSX). Starting with Mozilla 1.7.3 (unless there's another security firedrill between now and september'ish), Mozilla 1.8, and Firefox 1.0, it will be supported on Windows as well. However, Kerberos is not enabled by default... the doc explains all.
Update: Looks like Andrew Bartlett is working to add SPNEGO support to Squid (http://www.squid-cache.org/mail-archive/squid-dev/200407/0012.html). Mozilla currently ignores Negotiate challenges for proxy auth, so it seems like we will need to rework some things in Mozilla in order for his changes to Squid to be useful with Mozilla.
I posted some info on Xulrunner here:
http://wiki.mozilla.org/XULDev?XulRunner