I think this Google+ post does a better job at explaining what Hera is than the original article at Android Police, but it's still worth checking out, especially the punch line:
"The implication of all this is that Hera is the missing ingredient necessary to bring Android and HTML5 closer together. If apps are able to plug in HTML5 functionality to Android, using your device will be a substantially new experience. Besides that, this would radically change the app ecosystem for Android. Platforms like Tizen already make heavy use of HTML5 for app functionality, and it's easy to imagine that with this new paradigm Android could make use of HTML5 apps in a way that appears much more graceful than a simple web view."
Like the article states, this is a clear example of Sundar Pichai's growing influence as the man in charge of both Android and Chrome.
The idea itself is bloody awesome and Google has the technical ability to execute it with aplomb. I can't find the exact reference, but either at a previous Google I/O or Google Zeitgeist, Larry Page talked about this exact idea and how the device you use should not matter, rather the experience should be the same across various device types. While this is still a rumor, I trust Android Police's judgement of its authenticity and there is a good chance we'll see this at this year's Google I/O, with the roll out occurring to coincide a new Nexus phone, probably in Q4 2014.
Update: This might be a part of Hera or it could easily be the other way around. Either way (I hope) we are in for some big changes in Android in the coming year or two.