More from the expanding embarrassment of riches in the communication/collaboration zone. Interesting comments as well. (Note: it's not a Microsoft Live offering.)
This is a powerful application that addresses one of the primary benefit of wikis and online Word clones like Zoho Writer and Writely - collaboration via the Internet. The functionality from the user perspective is very similar to Microsoft Sharepoint Portal Server, which allows business users to collaborate on documents via a centralized Windows server. Unlike Sharepoint, Live Documents doesn’t store any documents on a server, and therefore doesn’t require you to have your own (very expensive) Windows server.