The Office Web Apps allow users without Microsoft Office installed to display or work on Word, Excel or PowerPoint files from the browser. It is a separate installation to your SharePoint Farm and controllable by two Site Collection Features:
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When active it will render Office 2007/2010 file formats in the browser, without any requirement to a locally installed Office suite.
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As you notice in the screen there’s no obvious way to create a new document, spreadsheet or presentation. So how would that work ?
The ‘New’ button on libraries has both functionalities; when a local installation of Office is found it will open up the corresponding application, else it will navigate to a page for creating a new file directly from the browser.
Word Web Application:
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If you’re using a modified document template, the new document will be based on the modified template.
Excel Web Application:
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If you’re using a modified spreadsheet template, the new document will NOT be based on that.
PowerPoint Web Application:
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If you’re using a modified presentation template, the new presentation will be based on the modified template.
It’s a shame Excel behaves differently, but other than that it’s a really nice feature !