Note that it isn't officially confirmed that iOS 5 would have the access to Japanese Earthquake warnings/alerts. The linked post discusses about it based on the rumors and speculations. Yet, this blog post could be useful to explain how this alert system works, even if the rumor turns out to be false.
If an earthquake hits, users will be alerted with a notification giving them information on the earthquake.
OK, none of the CNET reporter and commenters on this link seems to understand how Japanese earthquake warnings works.
What's the point of being told an earthquake is happening or just happened if you're in the earthquake zone? Hey, a bookshelf just fell on me, let me look at my phone to see what happened.
They seem to assume two things: a) If an earthquake hits, you will be alerted later. b) If the earthquake happened to your area, you must feel it anyway, knowing the information is quite useless.
They're both incorrect. Let me tell you why.
a) You will most likely receive the alert a few seconds before the earthquake hits your area.
Most of the big earthquakes these days have an epicenter in the sea, like the big one in North Japan on March 11th. In that case, there's a big delay, depending on how far the epicenter is, before the shake reaches the land. The alert system will notify all the connected cellphones, as well as on TV broadcast during this delay.
When I visited Japan, I received notifications on TV as well as to my Android phones (via a third-party app on the Market), and a few seconds later the actual shake came. So it worked.
You might wonder if a few seconds makes any difference - it indeed does. High-speed trains (Shinkansen) immediately stop when an alert is received, which helps a lot to avoid crashes. If you're cooking at home you can shut down the gas and turn off fire, if you're near heavy shelves you can stay away from there. Lot of things you can do if you know a quake is coming in advance, even for a few seconds.
b) If you feel an earthquake, should the detailed information be useless? Not at all. Even if your area only has a small shake, like Seismic Intensity 2, the quake's epicenter could be far away in the sea, which could be much bigger magnitude and could bring a terrifying tsunamis like it did in March.
See more about this notification system on Wikipedia.
You might have already noticed, but these benefits of the alert system doesn't work well if an earthquake's epicenter is at the land area and close to or directly below the observer. There won't be any delays before it hits the land area, and there won't be any tsunamis in that case in the first place. I heard they're working on it to make the system work more efficient in those situations as well.