Having recently made the switch from svn to git, I wanted to achieve what svn externals did (and what Piston did better). Turns out this is pretty simple, for example to get rails on edge:

cd your_git_dir
git submodule add git://github.com/rails/rails.git vendor/rails

A couple of other default submodules you'll want:

git submodule add git://github.com/dchelimsky/rspec.git vendorpluginsrspec
git submodule add git://github.com/dchelimsky/rspec-rails.git vendorpluginsrspec-rails

What submodule does is to check out the submodules as their own repositories, so they are tracked independently of the repository you made them submodules of. The submodules you have are tracked in the .gitmodules file, which might look something like this: