Office Web Applications give you the ability to run Microsoft Office applications such as MS Word, MS Excel and MS PowerPoint from within the web browser. A SharePoint 2010 Server makes this all possible. SP 2010 will need to be configured to run the Office Web Apps first (a post for another day).
To answer the original question of whether or not end users even need MS Office installed on their workstations anymore – it really depends on the end user and what they will actually be doing. To clarify, let me start out by explaining that the features available with Office Web Apps are slightly watered down. I would venture to guess that in most cases end users won’t miss the missing features; however, I do recommend performing a quick MS Office usage analysis to determine who still needs MS Office running on their workstations, and who doesn’t.
Keep in mind that since Office Web Applications are available via a web site (Intranet for example), end users will obviously need internet connectivity to work with MS Word, MS Excel and MS PowerPoint (a potential show stopper for some which require employees to work after hours and away from the office in situations where connectivity is not guaranteed).
This same ability is available for MS Excel as well as MS PowerPoint. I think this has a lot of potential and suddenly we have some interesting choices to make! It’s worth playing around with to see what you think.