Google Toolbar for Internet Explorer implemented Shared Dictionary Compression over HTTP (SDCH), a technique that speeds up loading web pages. According to Google's proposal (PDF), SDCH is "an HTTP/1.1-compatible extension that supports inter-response data compression by means of a reference dictionary shared between user agent and server".
One of the sites that benefit from this extension is google.com and Google decided to add support for SDCH in Google Toolbar for Internet Explorer.
A Google help page provides a way to remove the feature by disabling the "Google Dictionary Compression sdch" add-on, corresponding to the file fastsearch.dll from Google Toolbar's main directory. There's even an example when the dictionary compression doesn't work well.
The developer versions of Google Chrome implement SDCH as well. Here's an example of dictionary for google.com.