OneDrive (previously known as SkyDrive) is part of Microsoft's Windows Live suite, and offers you 25GB of free space to store and share your documents, photos and other files. Although users who registered before 25GB can elect whether to keep the full allocation, new users are now offered only 7GB of free storage.
OneDrive is found in the drop-down menu under Windows Live on your homepage. You need a free Windows Live account to access this, which gives you all the other web apps too, like Hotmail. Unfortunately, like Hotmail, OneDrive seems to have an identity problem - Not every part of OneDrive is branded as OneDrive, which makes navigation difficult.
For example, if you open OneDrive then open your document folder, the navigation path will then cease to mention OneDrive, instead opting for Office > My Documents. Confusing. This is a shame, because if you have Silverlight installed, the OneDrive uploading and management system is actually smooth and pleasant to use. Sharing and privacy options are clear and easy to set, and uploading files is dead simple and fast too.
If you use Windows Live a lot, OneDrive will be especially useful, but for other users, there are better options, like DropBox. Although they offer less total storage, they are more flexible and much better designed.
OneDrive is really generous with its 25GB of storage space, but is spoiled by poor navigation and file size limits.