Goo is usually present within testing chambers in order to provide a penalty for failure, and to ensure that test subjects are precise with their movements and positioning of their portals.
Objects that have fallen into the goo are irretrievable. In such cases where testing elements like cubes are needed to solve a test, a replacement may be issued immediately if the first one was dropped into the goo (unless the dropper is activated by a button, in which case you may have to press the button again). On some occasions during Portal 2, objects in the goo can be heard and seen fizzling immediately after falling in, while in most, they will simply be deleted soon after they fall out of sight and are not being held on to.
Appearance-wise in Portal, the goo appears as a mixture of red, green, and brown-colored liquid with a swirled appearance. As of Portal 2, the goo appears to be mainly brown, often with smoke swirling around its presence like in Portal.