About 4 hours ago I was just proof-reading a really long reply to this when the power went out
Well, we're having a lovely thunderstorm here in Western Mass, anyhow.
Folks have covered most of what I said. It's just like micarta, except with woven glass fiber instead of paper, linen, or canvas filled with a phenolic resin matrix. Like steel-reinforced concrete, this supports a hard but fairly brittle material (the resin) with a strong but flexible one (the glass - yes, glass is quite flexible in the right form). G-10 can be milled and ground like metal, but with substantially less resistance to cutting. This same ease of machining is why it is unsuitable for holding fine threads and scratches more easily than many metals. I have been told, however, that pound-for-pound it has a higher tensile strength than steel.
Why do you need such a material for a knife handle? Well, if a knife handle can bend under normal forces (like squeezing an unsupported area of the handle) the action will be affected and it may unlock or seize up. Similarly if the area around any moving parts becomes deformed over time, action will suffer.
I hope I won't be stepping on any toes (or mangling histroy too badly) if I use the Spyderco Police model as an example of why G-10 is such a fine handle material:
The original Police was in stainless steel. It was (and is) tough, reliable, and attractive. It was also slippery as a landed herring and weighed quite a bit (5.5oz? I haven't got my brochure handy).
The next variation was an aluminum-handled model with no coating and dimensions identical to the original. It was still slippery, but very light, as aluminum weighs nearly 2/3 less than steel at a given volume. Aluminum also is very soft, and this model scratched very easily.
The Tuf-Ram aluminum model introduced a coating that protected the aluminum from scratches. It was also a bit easier to grip, as the handles were thicker, but weighed a bit more than its aluminum predecessor as well (though still far less than the steel model). It's coating required substantial preparation of the aluminum (and a new pin construction), however, and it was much more expensive.
The titanium Police model achieved what the first aluminum had attempted: lighter weight in the same Police profile as the original. It wasn't as much lighter (I believe titanium runs .57 of steel's weight per unit volume), but was still a lot less hefty (I'd guess mine is about 4.0-4.5 oz). It didn't scratch, but was still slippery and was exhorbitantly expensive to produce.
Enter the G-10 Police model. I don't have all the weights, but I'll bet at 3.4oz it's the lightest Police ever. It takes its pin construction from the Tuf-Ram model, but has scales nearly as thin as the steel model. It is still plenty strong, and the rough G-10 surface gives the Police the grip it has always lacked (and makes scratches less noticeable). It is also hardly more expensive than the old reliable steel model. The perfect solution? Well, not quite, as it needed the addition of a steel liner to secure the clip screws as well as possible (and G-10's darn ugly, IMO). But after this modification it does seem to be the best Police ever.
Unless, of course, the Ti or Tuf-Ram Police re-emerges with Kraton inserts, muahahahaha!
------------------
-Corduroy
(Why else would a bear want a pocket?)
