I've always thought of Works as a poor man's Microsoft Office. There's an older version of Word, a PowerPoint viewer (not a PPT creator), addy book, database, calendar, etc.
Assumed to be Microsoft Works 9.0, this version could be software-based, hosted, or both. A hosted version would be ad-supported.
Mary Jo makes a valid point that a free Works could signify a competitive strike by Microsoft against Google Docs & Spreadsheets.
From my own experience, I see some other battlefields for a free, ad-supported Microsoft Works.
I don't have Office on one of my laptops. Didn't want to spend the dough. When I need to write on the road, I either go to our Web-based blogging tool (as I am doing presently) perform a major retro move back to the built-in Wordpad, or use my OpenOffice Writer.
That's OpenOffice Writer at the top of this post.
OpenOffice is pretty good, and it is free. In OpenOffice Writer, docs created therein are savable in W9rd's .doc format, but aren't total clones of documents created in Word. Some of my non-blogging clients have told me this.
But hey tell you what. If there was a free- even ad-supported- online version of Microsoft Works with built-in Word, I'd certainly use it on my notebook.