The following diagram shows the basic steps in the process of creating, deploying, and activating a sandboxed solution on SharePoint Online:

1. Develop and test the solution.

To create or customize SharePoint Online solutions, you must develop the solution on a local computer where SharePoint Server 2010 or SharePoint Foundation 2010 is installed. This includes debugging the solution; you will not be able to debug the solution directly on SharePoint Online.

After you set up your development environment, you can use Visual Studio 2010 to create your sandboxed solutions. In addition, Visual Studio 2010 can open and edit solution package (.wsp) files that are created in SharePoint Designer 2010, enabling designers and developers to tightly collaborate on solutions through a common framework.

2. Deploy and activate the solution.

After you create and debug your sandboxed solutions on your local computer, you must hand that solution off to your SharePoint Online administrator, if you do not have SharePoint Online administration permissions. The SharePoint Online administrator uploads the solution package (.wsp) file to the Solution Gallery for activation.

To make the solution available to users, you must activate it.

3. Monitor the activitated solution.

Activated solutions are monitored in terms of the resources they consume. Solution performance can be monitored by using multiple types of measures including CPU execution time, memory consumption, and database query time.

For more information on developing solutions for SharePoint Online, see SharePoint Online: An Overview for Developers, from which this diagram is excerpted.

SharePoint Online Sandboxed Solution Development Process