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Re:Google Apps adds two-factor authentication via SMS by DrewHintz on Monday September 20, 2010 @12:24PM (#1709366)
> Are keyloggers and the like blown out of proportion

Keyloggers and password reuse are a real-world security issue. Two-factor authentication provides an extra level of protection against them.

> being locked out of your account/domain .... for most small players/home users?

The final step of configuring two-factor verification provides you with a list of one-time codes you can print. This provides a back-up way of having codes in case your phone is lost. You can keep these printed codes some place safe like your wallet or safety deposit box.

http://www.google.com/support/accounts/bin/answer.py?answer=...

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