Disposable VMs will be very lightweight VMs that can be created and booted in a very short time, say < 1s, with a sole purpose of hosting only one application, e.g. a PDF viewer, or a Media Player.
To understand why Disposable VMs are important, imagine the following situation -- you receive an email from a customer that contains a PDF attachment, say an invoice or a contract. Obviously you're opening and reading the message in an email client running in your "work" AppVM (or "work-email" AppVM, if you're paranoid), just because it is a work-related correspondence, arriving at your professional email address (for many reasons it is good to use different email addresses for job-related activities and for personal life).
However, chances of somebody compromising your email client by just sending you a maliciously crafted message that would exploit your body or subject parsers are very small, if you have disabled full HTML parser for message bodies (which I think most security-concious people do anyway). Perhaps a more effective attack vector would be for somebody to 0wn your email server first, and then try to exploit IMAP/POP/SMTP protocol parser in your email client. But hey, in that case, they already would get access to all your emails on the corporate server, without exploiting your email client (well, they could however gain access to your PGP keys this way -- if this bothers you, you might want to use smartcards for PGP keys). There is also a possibility to do a Man-In-The-Middle attack and try to exploit SSL protocol early parsers, but this could be prevented using a separate VPN AppVM in Qubes.
But now you would like to open this PDF that a customer just sent you. It's quite reasonable to be afraid that the PDF might be malicious and might try to exploit your PDF viewer, and then try to steal your emails or other things you keep in the "work" AppVM (or "work-email" AppVM). It doesn't matter if you trust the sender, as the sender's OS might very well be compromised by some malware and might be infecting all outgoing PDFs without the user consent.
You could try opening the PDF in one of your non-sensitive VMs, e.g. the "random" VM that you use for causal Web browsing, to make sure that even if the PDF is malicious, that it won't get access to any sensitive data. But what if the PDF is not malicious, and what if it contains some confidential data? In that case you might throw the baby out with the bath water (your "random" VM might have been already compromised and now it would be able to steal the secrets from your PDF file).
A disposable VM is an ideal solution here. You create a clean, disposable VM, just for the purpose of viewing the PDF. Then, once you're done, you just throw it away. If the PDF was malicious it could done harm only to its own disposable VM, that doesn't contain anything except... this very PDF. At the same time, the disposable VM is always started in a clean state, so there is no way somebody could steal the document. Only the document can steal itself :)
That all sounds easy, but to make it practical we need a very efficient implementation of disposable VMs, and a good system integration, so the experience was seamless to the user. E.g. the user should only be required to right-click on a file and choose "Open in a Disposable VM", and Qubes should take care about everything else: creating the VM, starting it, copying the file to the VM, and starting a MIME-associated application for this type of file (e.g. PDF) in the VM. And this all in time below 1s!
Basic support for Disposable VMs is planned for Beta 1, which is scheduled sometime at the end of the summer holidays. But I can tell that's just the beginning. The ultimate goal, from the user's point of view, would be to make Qubes OS to look and behave just like a regular mainstream OS like Linux, or Windows, or even Mac, but still with all the strong security that Qubes architecture provides, deployed behind the scene. Seamless support for Disposable VM is one of the first steps to achieve this goal.
Special credits go to Matt Piotrowski, who just left Berkeley University, and whose recently published thesis was a direct inspiration to implement disposable VMs in Qubes. While we did mention "one-time" VMs in our architecture document back in January (see chapter 4.6), it really was Matt's paper that convinced me we should really have them in Qubes. Virtics, a proof-of-concept implementation written by Matt, shares lots of similarities with Qubes, like e.g. architecture and implementation of the GUI virtualiztion. There are also differences though, and I refer readers to the Matt's paper for more details.