The OICW consists of two separate components, which can be used together or apart - a modified, greatly shortened version of the Heckler and Koch G36
assault rifle, on the back of which is mounted a larger, six-shot 20mm
grenade launcher with an advanced targetting system. The 20mm grenades
can be set to detonate on impact, or after they have travelled a certain distance - the idea being that the user points the gun at, say, a window, and sets the range with the scope, after which the grenade is fired, primed to explode at that point. As mentioned above, this allows the rifleman to engage targets hidden behind corners; putting one's conjecture cap on, however, it seems unlikely that such a feature would actually be used in the murderous confusion of an actual firefight.
It's a clever concept, but there are some obvious drawbacks. Firstly, a six-shot 20mm grenade launcher, no matter how accurate, is limited by dint of capacity, weight, and a lack of power. Secondly, the shortened G36 appears to lack a useful shoulder stock, and would thus be of limited use when detached from the OICW - yet, when attached, the complete package seems rather large and unweildy. Thirdly, the OICW, at a projected unit cost of $11,000, half as expensive again as a standard M16 with an M203 grenade launcher, a combination which is cheaper, lighter, easier to use and less complex (and, in the case of the M203's 40mm grenades, more powerful).
The OICW is precisely the kind of thing that might appear in the pages of GI Joe and, if it is ever developed at reasonable cost, it is likely to be issued to select units only, those who have a need for a tiny rifle and an accurate low-power six-shot grenade launcher. Special Forces will probably balk at the complexity of the design, whilst it will probably be too expensive and fragile for conventional troops.