Microsoft’s Brian Jones has an excellent blog post explaining the reasons behind opening up the Office file formats through the standardization of the so-called Office Open XML Formats. These formats are described extensively in a 4000 page document. This document is work in progress for the ECMA standardization committee.
Brian also argues pretty well why Microsoft decided to create its own XML formats and decided not to use the Open Document Format. Microsoft wanted 100% fidelity in saving all the features of its Word, PowerPoint and Excel applications as XML. There are also performance reasons for keeping the XML tag names short.
Also of interest is the beta of the Microsoft Office Compatibility Pack for Word, Excel, and PowerPoint 2007 File Formats. This add-on for Office XP and Office 2003 allows you to use those older versions to create new documents and open, edit and save documents in the new file formats.