Dropbox synchronizes files between your computer and their servers. Keybase stores the files on their servers and only downloads/uploads them "on demand". Think of your web browser accessing gmail.com versus running something like Thunderbird that downloads your mail locally.
As a benefit, it's much simpler to implement - you don't need to work as hard to handle conflicts where two people made incompatible changes while offline. However, it will be slower for bulk operations and will require an internet connection.
Unfortunately the FUSE model isn't as simple to implement as it might seem. For performance reasons we're going to have to accept writes locally and push to the server in the background, which means all the same conflict resolution logic needs to be there. (In our case "there" means the client; the server can't help us, because it doesn't have any keys.) It's not clear exactly how much we'll be able to do for you without an internet connection, but the files you've read recently at least will need to stay in cache somehow. Fun times :)
so if i understand correctly, the model is more like the old megaupload/rapidshare/etc.....so what's new? Is it that they provide multiple ways of sharing tied to social media, compared to public/private/password protected mode of sharing for those aforementioned services?
As a benefit, it's much simpler to implement - you don't need to work as hard to handle conflicts where two people made incompatible changes while offline. However, it will be slower for bulk operations and will require an internet connection.