Allo launched on the Google Play Store today, just barely making it in before the "end of Summer" deadline they gave themselves at Google I/O back in May. Allo is Google's newest messaging app, but surprisingly it's not replacing Hangouts. Allo is only available on mobile and uses your phone number (instead of your Google account) to tie you to your account. A bit like WhatsApp, additionally it can only be used on one device. It's a bit strange right now, but it is also just the first release, so that will likely change in the near future.
What else is strange is how it handles SMS. First of all, it does support SMS, sort of. However, you are unable to set it as your default SMS application. When you are messaging someone that doesn't have Allo installed, you will see a message that says that the message will be sent via SMS. The user you are sending the message to will get a message reading "[Your full name] ([Your phone number]) added you on Google Allo to chat. Text HELP to learn more or STOP to unsubscribe. https://g.co/AlloSMS". Which is how the user can download Allo and/or learn more about Google's latest messaging app. However, for some Android devices, Google Play Services will display a notification prompting you to install the app from the Google Play Store. Which is actually pretty nice and appears to be pretty easy to opt out of.
A few other things to note here, if you switch devices and activate Allo on that new device, you will lose your name, profile picture, chats and contacts. Which is a bit strange, and likely something that will be changed in a future update. Google will likely use Google Drive to save your chats and such - much like WhatsApp already does. Connecting a Google account is not required, but it is required if you want the Google Assistant to learn more about you and give you better, personalized results. Finally, if you delete Allo, you simply won't see messages sent to you. Like iMessage on iOS, Allo doesn't deregister your number, so messages are still sent, you just won't see them until you download and open the app again.
When using Allo, do keep in mind that it is a new product and that this is the first release. So there are some bugs and a few features that are missing that you'd expect to be there. The Allo team will likely bring these into the app in a future update.