Office Online is an online Microsoft Office suite which allows you to create and edit files using web-based versions of Word, Excel, OneNote, and PowerPoint. Office Online is available through Office 365. Office Online provides “light weight” versions of Microsoft Office, which means that only the most-used features are available. Office Online also allows you to edit documents that are stored in OneDrive. When you want to edit or create a document in your OneDrive library, OneDrive uses Office Online to do so.
OneDrive and Office Online allow you to collaborate with other individuals on a document. When you are editing a document, Office Online alerts you that another author is also editing the document. Office Online will also show you what paragraph the other author(s) are currently editing. Office Online will also notify you when other authors enter and exit the document.
Collaborating on the same document with multiple individuals is also possible when the document is opened in a desktop Office application. Co-authoring in the application requires that all users are using Office 2010 (or later) in Windows or Microsoft Office 2011 (or later) for Mac OS X.
For more information about editing options in OneDrive, see Editing Documents in OneDrive.