MSDN has published a paper that gives an overview of the server based features of the Visual Studio Tools for Office. Unlike prior versions of Office tools, VSTO allows developers to deploy server based solutions using Word and Excel that do not require a copy of the software to be running on the server.

The paper shows how to create a server based application using Excel or Word that embeds Datasets into the document that are then filled using XML from a server file. This data is then stored in the document and when the user opens the document, the data will be bound to controls and fields defined in the document.

The paper also shows how to deploy the documents and application to a server.

Read Overview of Server Capabilities in Visual Studio Tools for Office, Version 2005