How does NFC on Google Nexus S and Android 2.3 work? I'm curious on the Near field communication, NFC that the Google Nexus S has. From what I understand, this techonlogy can be used to read RFID-tags, or am I wrong about that?

What can I read with an NFC enabled Google Nexus S? Can I read all RFID-tags? can I read something else than RFID-tags?
Using NFC enabled phone like Nexus S one can read NFC Data Exchange Format (NDEF) message content present in NFC tags. Gingerbread (i.e. Android 2.3) is capable of reading NDEF format which is specified by NFC Forum Type 2 Specification. 

NFC operates in the 13.56 MHz frequency range. NFC, is a subset of RFID that limits the range of communication to within a few centimeters. 

Based on what I read and understood, my guess is Nexus S should be able detect NFC tags and not the RFID. May be in later releases hardware would be capable enough to do that as well!

EDIT: Here's some additional info.

EDIT2:

Android blog states following are the new NFC related features in Android 2.3.3:


  
  A comprehensive NFC reader/writer API that lets apps read and write to
  almost any standard NFC tag in use
  today.
  Advanced Intent dispatching that gives apps more control over how/when
  they are launched when an NFC tag
  comes into range.
  Some limited support for peer-to-peer connection with other NFC
  devices.