Think about the size of an SD card. What things could you design in that amount of space? I think I might be able to build a stick figure out of tooth picks in a space that size. It probably wouldn't even be very good.
Perhaps just to show that they can (or perhaps because they just have extra money to throw around after getting rid of Helio) SK Telecom has gone and stuffed Android and just about everything needed to run it down into a SIM card.
SK's Android SIM packs a CPU, system memory, and 1 gigabyte of flash storage inside – in other words, it's more or less everything but the display and input device.
Now, what exactly does that mean to you and I? Not a whole lot, at this point. It's just a prototype for now, and they don't have any immediate plans to bring it to the market. If they do bring it to the market, however, it could work out to some pretty cool stuff; you could pop your SIM from one device to another (like from your phone to a tablet, or a netbook for example) and bring everything from the OS, to the settings, to all of your files with it.
Of course, there are about a dozen ways to do that without stuffing everything onto the SIM (like syncing everything to the cloud, for example), which is presumably a big part of the reason why this is solely conceptual. SK Telecom is considering making themed versions of the chips (such as Android installs pre-loaded with wallpapers and media for sports teams) which carriers could sell to the consumers in place of pre-flashed handsets.