The current big names in location services, such as Gowalla and FourSquare, work around the concept of checking in at a location and earning credit for being there while building up a database of your favourite spots alongside a game engine that allows you to earn badges and kudos by checking in to new places or claiming ownership of a location.
Latitude currently has an eye on providing a more personal service, asking not only where you are just now, but finding out where your friends are. Where the LBS games focus on the locations themselves, latitude is a much more personal experience for the user.
As with most API’s there are likely to be new clients and improved ways of checking in alongside more innovative and off-the wall uses. I suspect we’re all waiting to see what mad ideas will join the obvious ones around location.
More on the API at Google Code and the Google Blog.