Definition:

Google’s feature whereby search results are suggested while the user types in his/her query.

Information:

On average, an individual takes about 10 seconds to type in a query in the search box, press enter, and wait for the result. In order to enhance its functionality, Google Instant search allows the system to look for results while the user inputs his/her question. According to Google, this can cut short the 10 seconds per query to 3 seconds.

By default, this feature is turned on. But the system will turn it off if the internet connection is slow because this feature might slow the search down more. The reason for this is that Google Instant Search consumes more data as compared to the older version.

This feature can potentially drive more visitors towards results proposed by Google, and this is especially important for search advertisers. This can also shorten the conventional lengthy google activity.

Official Site:

Google : About Google Instant

Helpful Articles to Understand Google Instant:

Google Instant: Fewer Changes to SEO than the Average Algo Update
SEO Moz (September 21, 2010)

Google Instant Search: The Complete User’s Guide
Search Engine Land (September 8, 2010)