Gavin took OS Openspace data and wrapped it up as KML which allows it to be read by GEarth and GMaps. Ed Parson's wonders why OS have turned off Gavin's licence, there is no clear explanation as to why this was done by OS. However, I find it odd that Ed didn't think about Google's terms and conditions, it's via Ed that I know about the section that does not claim ownership of your data published in GEartn and GMaps but does seek to claim the right to reuse it without having to obtain permission. Google claims this is purely for the purposes of being able to search the content and to promote their services.
IANAL, nor have I insider knowledge of the legal views of OS but it seems to me that to defend its copyright OS wants to be seen to be preventing its data being put into GEarth and GMaps because it does not wish to activate that right. I have no idea if Google would be able to claim that right based on Gavin's mashup but the risk must be there.
I have no real insights on the rights and wrongs of this beyond what is already out there in the blogsphere but as someone who is working with both OS and Google it would be in everyone's interest (including the ultimate employers of OS, the British tax payer) if they would both start at least discussing these rights issues.