Google fax is simply using your Gmail account to send and receive faxes with the help of an email to fax service. With these services you can fax from with your email the same way to send regular email, the only difference is that you will be sending your message or attachments to a fax number.
You also get a free number and all the faxes you receive are automatically sent to your e-mail. Some people like to call this a Google fax number because you will receive all incoming faxes to your Gmail, even if the user is sending from a fax machine. You can pick from a variety of numbers or also keep your current number and integrate it with this service.