The service is fully developed and seems to be in the final stages of testing. Google promises "Puzzles for Premium Music Apps … [with] Access to hundreds of premium apps and games" – with an emphasis on games. Some of the titles included are the $ 7.99 Stardew Valley, Marvel Pinball Risk and others. The test service was originally discovered by a user, but Google acknowledged Android Police that it is indeed and in test.
Apple's arcade launches this fall with an impressive number of developers, including LEGO, Annapurna Interactive, Cartoon Network and Sega. Apple also cuts development costs and relies on exclusive titles, which does not seem to be the case with Play Pass. In any case, Google might want to counteract this by starting its service at about the same time.
Given the popularity of subscriptions to music and movies, the services make sense. It remains to be seen, however, whether this is a good model for apps and especially for games.