According to the Google post, "The Translate feature automatically detects if the language of a webpage you're on is different from your default language setting and allows you to translate it. With one click, you can now instantly translate the page and all of its text will appear in the new language."

Here, we can see Amazon.de translated, and not too badly:

However, on this French site, the language wasn't automatically detected, and the text didn't get translated at all, even though Google said it had done so:

Another reason we're not in love with the translation feature is that it doesn't automatically translate pages once you start navigating around a site. Although the Google blog states, "If you go to another page in the same language, you will continue to see translations rather than have to translate one page at a time," we did not consistently find this to be the case in our own testing. For example, we were surfing Chinese.AOL.com and had to ask Google to translate with each click through to another page on the same domain.

Another feature of the toolbar translation is real-time translation of dynamic content, which we found worked in Google Reader and FriendFeed just fine.

The translations were not perfect but were on par with other results we've seen historically from Google Translate. Overall, for users who still choose Internet Explorer and who navigate a lot of foreign language sites, this might be a good tool.