In Japan people need to stay healthy because you don't get many sick days. So people often wear masks to keep from getting sick and/or spreading germs. It's a nice system that I'm not really allowed to partake in as a foreigner. That's okay with me...I bet they're horribly uncomfortable.
That all being said... The public or media or whomever decides that people are going to panic is a bit crazy here. I think this article sums up my feelings on the precautions against the swine flu.
The bottom line: I love Japan. Some things confuse the hell out of me. This is one of them.