It combines added functionality of other services and not just web hosting.
Let's take the droid for example... I bought a droid about 7 or 8 months ago and it was defective... I returned that droid and they gave me a new one... Well, about 30 minutes after logging in all of my apps that were on the defective phone reinstalled themselves on the new phone.
There's also the storage piece but not many will buy into that.
Anyway, in short it can be the culmination of many technologies in collaboration. Honestly though, Microsofts modular approach seems to be the best one out there so far.
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