The $5,000 payout are for developers whose gadgets receive at least 250,000 weekly page views and apply for the program. To apply, you need to submit a one-page proposal detailing how you’d use the grant to improve your gadget, and email it to firstname.lastname@example.org.
The $100,000 seed investment is the step above, where developers would like to build a business around the Google gadgets platform. The first requirement is that you be part of the $5,000 grant project, after that - you need to convince Google you are worth the $100,000 investment.
There is a huge Google Ventures FAQ with more details.
Danny Sullivan has a quote, "The payoff for us is in more pageviews and users. By getting more users, we get more searches," said Marissa Mayer, Google's vice president of search products and user experience.
We have a simple Google Gadget with currently only 1,226 users and 32,437 pageviews, so we need some help to reach the $5,000 grant. Go to this page and click on the "Add it Now" button to help our cause, of course, please tell your friends.