The premise is simple: by downloading the new plugin, Google Drive appears in the list of storage volumes that Office can see and access. Microsoft already has similar agreements with Box and Dropbox, among others.
Google and Microsoft have competed fiercely in the office area with Google Apps and Microsoft Office especially in the world of administration and education. The rivalry remains, but with the launch of the plugin it seems that tensions are relaxed.
As a Google spokesperson explains to PCWorld.com, we believe that users should be able to use whatever tools they choose, and this functionality will make it easier for both Office and Google Apps to use interchangeably.