When you activate Googles two-factor authentication you will have to use some application specific passwords for applications that don't support two-factor authentication. How does the application specific passwords work and are they more secure than regular login and password?
Application specific passwords are extra passwords for your account. While you give the password a name, it doesn't explicitly tie that password to a specific application. That feature allows you to easily deactivate, by device or application, the password in question.
In some respect, they could be seen as a security vulnerability. That's why you should never write them down. An app-specific password could be used by an attacker to sign-in to your account. However, I don't think there's a way to fully hijack the account (change the main password with the app-specific one). So, there's only a limited benefit to an attacker if they compromise your account with an app-specific password.
App-specific passwords are going to protect your primary authentication information from being compromised. They're required when you turn on 2-factor authentication, because there are some apps that won't accept the 2nd factor token. The app-specific password is a temporary work around until other apps can add support for 2-factor authentication.
2-factor authentication requires more than just your password (in this case, your phone) in order to compromise your account. And, in that respect, the combo of 2-factor auth and app-specific passwords are doing a whole lot of good, keeping your account safe and away from any hijacking attempts.