The web interface mimics the ribbon-based look of Office 2007 and upcoming Office 2010, and retains most of the editing and formatting features of their respective desktop counterparts.
Initially not all features have been enabled, though. Testers won't be able to edit Word documents online, for example, only view them; but they can create, view and edit Excel worksheets and PowerPoint presentations. The Office Web Apps version of OneNote is also missing and will be made available "at a later milestone" along with tighter Office 2010 integration on the desktop.
Microsoft plans to open Office Web Apps to the general public for testing, but it has not set a date for that beta other than saying it will be available before the end of this year. The final version should be available as a free part of Windows Live sometime next year, probably around the time Office 2010 launches, no doubt in response to increased competition from Google and other web-based office solutions.