According to their technology page, they don’t use Flash or Silverlight which is hard to believe given what they show in their guided tour. Also, they suggest an “automatic sync” of files between a desktop and the cloud. This cannot be achieved with just an in-browser app. One needs to install software locally.
The experience seems really nice. No word on what happens when you don’t have net connectivity of course :-)
What I do like about this, in contrast with other similar in-browser “OS”es I’ve seen, is that they are thinking about 3rd party developers. They seem to have a story about 3rd party applications. This suggests that they are building a platform, which would be cool (one of the reasons Facebook has been so successful is because they built a platform for developers… the strength of Microsoft as well, right? :-).