Exchange in the cloud
Microsoft Exchange offers considerable benefits for small businesses, including security, the ability to customize how people are allowed to get their email, archived email, and much more.
But maintaining Exchange server hardware and software is beyond the reach of many businesses. Office 365 offers Exchange in the cloud, so that a small business need not concern itself with getting and keeping Exchange up and running. Instead, they can reap the benefits --- all they need to do is log into an administrator screen and run it from there. It can save considerable time and money, and give the smallest business the same kind of benefits that big companies do from Exchange.
Everywhere access to your mail
With Office 365, no matter where you are, your email is there as well. It includes Outlook in the cloud, so that you can use the Web-based version of Outlook to get your email from any computer. It also offers excellent support for smartphone access to your email, including from the iPhone, Windows Phone 7 phones, and Android devices.
SharePoint for the rest of us
SharePoint lets you build web sites called Team Sites that allow everyone in your organization to collaborate on and share documents. As with Exchange, installing and maintaining SharePoint is beyond the capabilities of many small businesses.
In Office 365, you get SharePoint in the cloud, so you only need to focus on building the Team Sites, not worrying about the underlying hardware and software. Truth be told, SharePoint still isn't for the weak of heart. But spend some time with it, and you can reap considerable benefits if you've got an organization that needs to share work.
By the way, this doesn't mean that Office 365 doesn't have problems --- it does, notably how poorly integrated all of its parts are. For more details about the good and the bad, see my review, Microsoft Office 365 beta: Potentially useful, occasionally frustrating.