Has anyone heard of Adobe Air? It's suppose to blur the line between desktop and web environments or something, but I could not find much at all online about what it does exactly.

no, never heard of it. But I would like to know about it. Where did you heard from it? If you know the functionality, don't you know what's the core of this software or module you are talking about.

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I found a few pages on it, http://labs.adobe.com/technologies/air/ , I read about it originally in a magazine, it all seemed pretty much like "this technology will revolutionize the web, but we won't tell you how". Coming from Adobe, I wouldn't be surprised if it's something major, but I don't get what exactly it is mean't to do.

I have been using Adobe Air, and learning it too. It looks really good.
The new site Pownce is made using Adobe Air. Looks really awesome.
See some sample application that are possible in Adobe Air, you will like it.