A common misconception about SharePoint Online is that you can’t develop workflows in the Sandbox.  In my Developing Powerful Workflows in the Cloud with Microsoft SharePoint Online session, I show how you can create workflows that run in the sandbox using SharePoint Designer 2010, how to develop custom workflow activities using Visual Studio 2010 and sandbox solutions and how to deploy those workflows to SharePoint Online.

Video of the session and slides at the link above.

-Mayo.