The latest version of Google Toolbar has a feature i.e. enabled by default that replaces replaces the custom 404 “Page Not Found” on the website in Internet Explorer with more useful suggestions*: the site's homepage or subdomain, some search queries that could help you locate the right page. The idea is that you probably clicked on a bad link or the page was relocated without using a redirect. In this case, Google's query segmentation is not perfect, but it usually does a pretty good job at transforming a URL into an useful query.
*Google’s 404 page contains a Google search box, and if a user decides to use it, the visitor will be taken away from the site. Even more underhandedly, the search box on Google’s 404 page is pre-populated with data from the initial URL query on your website.
Google Toolbar only displays that page for default error pages (that have less than 512 bytes), DNS errors and connection failures. The feature can be disabled from Google Toolbar's settings by unchecking "Browse by name in the address bar", a feature that also performs searches when you enter keywords in the address bar.
So which of the three pages is more helpful for someone who ends up on a non-existing page from a site that didn't bother to create a custom 404 error page?
Same custom replacement is done by Internet Explorer, that replaces default 404 error pages with its own page, but nobody complains about it. For example, a site that doesn't have a custom 404 error page (they're very hard too find these days, so most sites won't fall in this category). If you try to go to news.speeple.com/sunflowers, here's what you see in IE7: a page with useful suggestions like "Retype the address" or "Go back to the previous page".
This is actually a page created by Internet Explorer and you can disable it in the advanced settings, by unchecking "Show friendly HTTP error pages". Here's the page returned by the server, which is displayed in most browsers (Firefox, Opera, etc.):
Matt Cutts has given his reaction on “How 404 pages work in Google Toolbar Beta 5”:
[…]The Toolbar beta 5 announcement on the Google blog mentioned “You’ll get suggestions instead of error pages: If you mistype a URL or a page is down, now the Toolbar will give you that familiar “Did you mean” with alternatives, like when you do a Google search.” And the John Mueller did an excellent run-down for webmasters when he talked about the Google toolbar beta on Google’s official webmaster blog. Here’s the part of John’s post that probably interests you:
404 errors with default error pages
When a visitor tries to reach your content with an invalid URL and your server returns a short, default error message (less than 512 bytes), the Toolbar will suggest an alternate URL to the visitor. If this is a general problem in your website, you will see these URLs also listed in the crawl errors section of your Webmaster Tools account.
If you choose to set up a custom error page, make sure it returns result code 404. The content of the 404 page can help your visitors to understand that they tried to reach a missing page and provides suggestions regarding how to find the content they were looking for. When a site displays a custom error page the Toolbar will no longer provide suggestions for that site. You can check the behavior of the Toolbar by visiting an invalid URL on your site with the Google Toolbar installed.
So if you’re a webmaster and want users to see your custom 404 page, just make your page be more than 512 bytes long. I do think that this feature is really handy for most users. Let me give some screenshots to demonstrate what it looks like.[…]
Google, Google Toolbar, IE, Internet Explorer, 404, Error Pages, URLs, Search, Web Search, Google Search, Search Engine