For anyone else interested, the feature is called 'inline AutoComplete'. It sort of reads your mind and starts filling in the rest of the url for you. I too thought it was annoying and unnecessary and turned it off.
Again, to do so, click Tools->Internet Options->Advanced.
Then remove the check mark beside "Use Inline AutoComplete".
I knew exactly what you were saying...I was just adding my 2 cents regarding IE7 - where you can already delete browsing history.
I was just wondering if they took it out of Beta 1 and put it back in Beta 2...sorry i wasn’t clear.