Office is a lot more than just Word and Excel, and when you buy Office as a subscription from Microsoft (or Microsoft partners), you can get the options you want with Office 365, from just the desktop applications to the server tools (Exchange, SharePoint Lync and SkyDrive Pro cloud storage) or a combination of both.
What all the Office 365 offerings have in common is that you pay a monthly fee (currently from £3.30/$5 to £16.50/$22 per user per month) to use them on multiple devices, and that you get regular updates and improvements.
If you just want the Office desktop applications, Office 365 ProPlus includes the business versions of Word and Excel (including business intelligence tools like Power Pivot and Power View), PowerPoint, Outlook, Project, OneNote, Publisher and Access, the Lync client and Office Mobile for iPad or Android that you can run on up to five devices (PC, Mac, iPad or Android depending on the app you choose). You install the Office software from the web and it's ready to use more quickly than a traditional copy of Office – in just a couple of minutes - but it runs on your PC (or Mac) as usual.
When you tell Office 365 to install the desktop Office apps, the software streams from the Office 365 servers, giving you the most important files first. The introduction that you can watch is actually running in PowerPoint, for example, and if you start Word right away it might only have the most common commands installed. Choose another tool from the ribbon and it might stream the code to run it from Office 365 (but all the code will be on your PC within ten or 15 minutes on a reasonably fast network).
You can also stream the desktop applications to any Windows 7 or 8 PC that you're using temporarily. And if someone leaves the company you can deactivate the Office subscription on their PC remotely and use it for another employee.
More versions, more choices
There is are also a consumer Office 365 version of the Office 2013 applications, Office 365 Home Premium, which costs £79.99 a year. This doesn't include all the business desktop applications (you don't get Project or Lync), and while it can run on five different devices it's designed to be used by different people in the family rather than the same person using multiple PCs and tablets.
Most importantly, the licence doesn't cover using Office applications for anything that makes you money (like sending business email or writing work documents). If you have users bringing their own PCs in to work, if they're using Office 365 Home Premium you'll need to pay for a business Office licence for them to use it for work.
If you just want the Office server products, so that you don't have to run your own Exchange server, there are Office 365 Small Business and Enterprise plans that give you Exchange for email with Outlook Web Access for webmail, device management, spam blocking and anti-malware protection, SharePoint for document sharing and web publishing, Lync web conferencing and instant messaging (with Skype audio calls rather than the full IP voice tools of Lync Server online)the Yammer enterprise social network tool.
You get both shared storage space in SharePoint and 25GB of space per user in SkyDrive Pro, where they can sync files to the cloud and share them with people outside the company like any cloud storage service, plus versions of the Office Web Apps that store documents on your Office 365 storage rather than in the free SkyDrive service.
These are the services that have been available from Office 365 for the longest, but they're now based on the Office 2013 versions of the Office servers. Upgrades from the original Office 365 services took some time (months in some cases) but the new versions are designed to upgrade far more quickly and new features have been rolling out steadily. For example, Microsoft added Yammer to the Enterprise plans last year, with an option to turn off the SharePoint social network features.
