That last option underlines Microsoft's view of Office Web Apps as a companion to the traditional desktop suite, not a substitute. Promised integration between Office Web Apps and Office 2010 will allow Office 2010 users to save documents to the Web and open them from the Web directly.
I didn't manage to get Office Web Apps working with the Technical Preview of Office 2010, but I did get it working with Office 2007 on Vista. I needed to be using Internet Explorer to make it work. I could click "Open in Word" in Word Web App and the document would download and open in Office 2007. From there I could make changes, and when I hit Ctrl-S the changes would be saved back to the document stored online. If I then reloaded the document in the Word Web App, I would see all the changes.
It's nothing more impressive than what you can do right now when you open a Word document from a networked share, but it shows how Microsoft is thinking about Office Web Apps and the desktop apps as a unified whole.
Why the WebWhen it came down to it, none of the three Web-based productivity suites I tried proved an adequate substitute for traditional desktop software. To be fair, all three are works in progress. But as someone who spends most of his day in Microsoft Office, I needed mere minutes to find some area where each of the online alternatives failed to live up to what I can already do on my desktop today.
So what do these three efforts, ambitious though they are, really hope to achieve The answer may lie in the disparate business models of the three competitors and the separate niche that each hopes to carve for itself.