Chrome OS is a very small OS that's designed for running online applications (e.g. you write your documents in Google Docs, etc). It's used mainly by devices that resemble small laptops ("Chromebooks"). As Mike says it has very limited capabilities when not connected to Google services, so it's not at all like a PC operating system.
As for its popularity, the Google Play Store in the UK has a basic Chromebook (2GB RAM, 11.6" screen, 16GB on-board storage - including space used by OS, and 100GB Google Drive storage for 3 years) for £199, and a high end one which starts at £799 for 8GB RAM, 32GB on-board storage and a 12.9" screen, 1Tb Drive storage (£999 for 16GB RAM and 64GB storage - an incredible markup for modest upgrades IMO). I can buy a basic laptop for the cost of the cheaper one, a pretty good one for the price of the higher-end model. The £999 price tag of the top end one will get you a 13" Macbook Air with 256GB SSD storage. So the reason that Chrome OS hasn't taken over the mass market is obvious: most people will not pay the same (or in some cases more) for a netbook that is entirely reliant on cloud storage and runs an OS that limits your selection of apps rather than a regular laptop.
