Of course it's chaotic – you have one wave with everyone in it and the topic is “Testing Wave”. That's like inviting everyone in the office to a meeting about “stuff”. In real use, you could have normal email conversations like you do now, with the benefit that if you invite someone new to the conversation you don't have to forward all the previous mails.
As for live updates, it's up to you to decide if you are online, in IM mode, I'll answer that now, or offline, in email mode, flag that and deal with it later. Nothing new, apart from having to use several apps whose total extent of integration is cut and paste.
Email has been sick for a long long time, it's time to let it go.