It's accurate to about one or two city blocks most of the time- it really depends where you are. I'm in an urban environment, so I imagine it's likely to be more accurate since there are more cell towers in a city. Sometimes it even more accurate and gets almost my exact location. (I'm using the iPhone by the way).
It can update in about 4 or 5 seconds, so if you're willing to manually refresh it I suppose you could use it to help with driving directions. It's probably good for an occasional check if you feel like youve missed a turn. I would recommend pulling over before doing this though. To know where I am though, I usually just look at the driving directions map segment and the street signs.