HOLE

If the hole shall be circle or rectangle, click "Draw hole" first, then choose shape

RECTANGLE

Choose option. Click on map to place a marker. Click again for next marker and so on. A line is drawn each time you add a marker. In the first option the line will follow the streets or roads on the map (GDirections). In the second option the line will be a straight line between the markers.
You may change style for the line with 'Style options'. Click 'Edit lines' if you want to edit the line.
Complete code is only available for KML and is presented in the text area.

Text for the markers' infowindows may be added when you are finished drawing.
Click 'Next shape' to finish the drawing.
Then click on the marker you want to give 'name' and 'description'.
Then click on 'Document, Placemark' and enter your content.
Then click 'Next shape' and go on with other markers.
Always click 'Next shape' before you click on a marker. No harm is done if you click too much on 'Next shape'.
A 'tinymarker' always indicates an active shape. 'KML' always shows complete code.

Digitizer tool - online Google maps v2 tool

Live code presentation:

Click the 'Document, Placemark' button to edit 'name' and 'description' elements.

Click on the map. Create marker, polyline, polygon freehand or circle-shape or rectangle. You may change draw mode at any time while
drawing polyline and polygon. Use the Close Polyshape button to let
start and end meet (not needed if you draw circle or rectangle).
Choose 'Draw mode: Combinations' to draw paths, routes, directions with markers.

The "Edit lines" button is a toggle button - click to start editing, and click to stop editing.

To draw more than one shape: When finished with a shape, click "Next shape". No need to copy and save first. The 'KML' button will give you all the KML code you have created.

A finished shape on the map may be edited. Click on it. If you
inspect or edit finished markers, always click on 'Next shape' before
you click on next marker, else infoWindow content will not swap.

To draw polygon with hole: Draw a closed shape in Polyline draw mode first. Then mark Hole and draw a (closed) shape within.
Choose Polygon draw mode to view the result. If you draw outer shape counterclockwise, draw inner shape clockwise and viceversa, else it will not work in all browsers.
On this map there will be a line from the outer outline to the inner
outline because the polygon is drawn with javascript code. This line
will not be there when the polygon is read from the KML file to a map.

Uncheck 'Live code presentation' for greater speed when you draw shapes with large amount of points.
Check it when you want to see the code.

This application uses Google Maps API version 2. The same tool with Version 3 is here.

This is the tool I use to create overlays for my Google API maps. I use it to draw polyline, polygon, circle and polygon with hole on my Google map. It is also a marker tool. In the drawing process I may delete and edit points and lines. Style management is available with the 'Style options' button. Polygon colour, line colour, line thicknes, opacity may be changed. The coordinates for the overlay are written inside KML text, ready to be copied and saved in a KML file. I can also choose to let the tool present only the KML coordinates, without the KML elements. And I can also switch to the Google Maps API JavaScript code for the overlay. The map registers mousemove and presents the coordinates of the mouse position. Zoom level is shown when zoom is changed.
Examples of my use of Google Maps API with KML
Southern Cassowary distribution
Little Spotted Kiwi distribution

You may draw paths, routes, directions with this application. Choose Combinations in Draw mode. One of the options there use GDirections.

The OpenStreetMap map type has been added to the Google Maps map types. It has been embedded as a layer within the Google Map. This will in many parts of the world give you map tiles with more details than the default Google Maps tiles.

If a coastline is part of the shape you want to create, you may use templates and build on them
Build Google maps polylines and polygons from templates

Here are some other tools and helpers I have made

Smaller map tool	Marker tool, KML, coordinates
Edit Google Maps KML file	Custom overlay for Google Maps
Google Maps API v3 tool	Reading a KML file

I use "new GPolygon.fromEncoded" to present polygons with holes on the map. To do the encoding, I use PolylineEncoder.js provided by Mark McClure. Choose Code text Javascript when you have finished a polygon with hole if you want to see the javascript for "new GPolygon.fromEncoded".
To draw a polygon with a hole with this application: Click "Holes" and follow the instructions. Draw a closed shape in Polyline draw mode. Draw a (closed) shape within (if you want a hole, but it is possible to draw the second shape outside or overlapping). Choose Polygon draw mode to view the result.

The Google Maps API was not compatible with IE8. This has been filed as a bug in
http://code.google.com/p/gmaps-api-issues/issues/detail?id=1055
and
http://connect.microsoft.com/IE/feedback/ViewFeedback.aspx?FeedbackID=362142
Problem description
The problem is that the 'click' event in Google Maps API do not behave in IE8 the way it does in other browsers. There are workarounds. The 'mousemove' event in Google Maps API returns the correct position in IE8. In this application I register the mouse position when the map is clicked and use that instead of the clicked position. Thus, IE8 works fine with my google maps tool.
Update
5. January 2010: There is a message in the google thread above that the bug has been fixed.
I have changed the code in my application. There is no special treatment for IE8 now in the code.

Options

Digitizer tool - online Google maps v2 tool