Well, for my needs, it means making the assessment tool the only application available to the student. The best scenario, though, would be to have that configurable, so that not only could they have, say a OneNote page to write their responses and Maple or Geogebra to try out their ideas but not have access to previous notes in OneNote nor social-networking, etc. And this has to be dead-easy, one-click on, one-click off kind of configurability on the part of the teacher.
Two ideas: one totally lo-fi and the second an easy-to-use program.
First: "Hands up! Spot check!" The teacher tells the students at the beginning of the assessment that there will be random spot checks. Anyone who has an illegal browser / program open forfeits their grade. Anyone who continues typing forfeits his or her grade. Students just flip their screens around for the teacher to spot check. I use this method all the time and generally after you catch a student the first time, you never have another problem.
Second: SMART sync 2009. This is the new version of SynchronEyes. It gives you one-button control over all student computers. You'll be able to monitor each screen in your room and you'll be able to block and/or control student machines and access. I've used SynchronEyes in a 'language lab' type of setting and it worked just fine. You can even use the program to create simple self-grading reading-checks.