This is the new format for Microsoft Office documents.
It is a combination of XML architecture and ZIP compression for size reduction.
Microsoft promises the format will be open (published for anyone to use) and prior versions of Office, using components provided by Microsoft for Office 2000, XP, and 2003 will be available to perform document conversion. Remember that these are promises by Microsoft. We have yet to see the actuals. This format is not the same as the OpenDocument standard, also an XML-based standard being developed as a true open standard (see the OpenDocument Fellowship for more information).