It understands a lot of words, like : measures (feet, inches, meters, millimeters, etc.) quantities (litres, gallons, millilitres, etc.) weights (pounds, kilograms, etc.) time measurements (hours, minutes, etc.) And you can calculate and convert pretty much everything with those keywords.

Edit : here's a link that shows you other interesting possibilities http://www.google.com/intl/en/help/features.html#calculator