With Microsoft Office Web Apps, you can edit MS Excel workbooks and Word documents and PowerPoint presentations from Hotmail inbox. Editing PowerPoint, Word and Excel files is simple, here is what files are supported:

• Microsoft Word (.doc, .docx)
• Microsoft Excel (.xsl, .xslx)
• Microsoft PowerPoint (.ppt, .pptx)

and here is the how-to guide:

How to Edit Word (doc) & Excel (xsl) Files from Hotmail

Step 1: Sign up for Office Web Apps

Step 2: Go to your Hotmail inbox and open any email that has Word / Excel file as attachment.

Step 3: Click on name of the file in the email to open it.

Step 4: Once opened, click “Edit in Browser” to enable file editing. This will upload a copy of the file to SkyDrive.

Step 5: Now make the changes you want, save the file and close it.

Optional

Step 6: Now Hotmail will ask if you wanted to reply to the sender with updated file. A link will be included in the email to the document you created.