Office Live provides integration points with Office client programs to enhance user experience and make it easier to upload, access and maintain the information.
The Microsoft Office Live Update (download: Office Live Update 1.3) is a small program that you install on your local computer to extend your Microsoft Office experience to the Web. The Office Live Update installs the following updates and tools:
This is how the Office Live Add-in looks like in Word 2007 client. You can select "Open from Office Live" option to open files from your Office Live Workspace after signing into it. "Save to Office Live" option is for saving the document to Live Workspace
The File Open and File Save dialogs look similar to ones you get when trying to open/save a file from/to SharePoint 2007 site.
In Microsoft Office Live Workspace, you can use the Contact List, Event List, and Task List to collect important information for your projects. You can get this data in Outlook or Excel based on your need.
Connect to Outlook
If you have either Office 2003 or Office 2007 installed on your computer, you can then transfer your list contents to Microsoft Office Outlook client, where the list content appears in its own folder. There is no need to update the two lists separately; any time you make changes to your list in Office Live Workspace, the same updates appear in your list folder in Office Outlook.
If you use Office 2003, you cannot make changes to the list content in your Office Outlook folder. If you use the 2007 Office system, however, you can update your list folder in Office Outlook, and if your computer is connected to the Internet, the updates automatically appear in your list in Office Live Workspace. For more detailed information, you can refer to link - Connect your list to Outlook
Export to Excel
Just like you can connect list contents to Outlook, you can also export the list contents to a Microsoft Office Excel worksheet. It's a quick way to work with your lists offline and further analyze your list contents using Excel features.
If you use Office 2003, a read-only version of an Office Excel spreadsheet opens with your list contents inserted. To make changes to the spreadsheet, you must save it to your computer or post it to a workspace. If you use the 2007 Office system, when an Office Excel spreadsheet opens with your list contents inserted, you can make changes to the spreadsheet. For more details read - Export list content to an Excel spreadsheet