The new Google Toolbar for Firefox lets you view documents and spreadsheets online, no matter if the files are on the web or on your hard disk. Picasa Web Albums hosts videos uploaded using Picasa, without the trouble of using Google Videos. Gmail has a player for MP3 attachments. The new Google Book Search includes a PDF reader, even though you can't use it for your files yet.
What if all these file types and many others were treated the same even if they're online or offline? You wouldn't need special programs to perform basic tasks, you might get advanced features available only in commercial applications (like OCR). You could share your files easily, edit them collaboratively and always have the latest version.
What if a small add-on like Google Toolbar could transfer all the processing burden to an Internet operating system? The Docs & Spreadsheets integration with Google Toolbar might just be the beginning.