I feel the same way: unsure - and that's the problem.
If Google were to announce that the $9 a month would include an additional instance or if the free plan were allowed to scale, I might be a little less distraught. I have read that each instance hour would be billed by quarter fragments, but what the criteria that triggers a new instance is - I don't know. And none of this information is official.
So, EC2 has small instances as low as $0.02 per hour and Rackspace has a $0.015 per hour instances; both having root privileges. Cloudbees has a free tier PaaS as well. Yet Google wants to charge $0.08 per hour for each of their instances that will only work to serve a single application (hopefully Google will offer smaller sized instances).
I understand Google needs to make money, but we need all the help we can get. We're the future of our economy and the internet. I've always believed that Google's App Engine was about incentivizing start-ups. That means Google's own success with App Engine depends on our success.
Some developers have been talking about a "breach of trust" on Google's part, and I feel that as well due in large part to the confusion they've caused. Because not knowing if I should keep working on my app or start migrating to another platform is the worst part.