Microsoft 365 Features Explained: Complete 2026 Guide

Quick Answer: Microsoft 365 includes four feature categories – productivity apps (Word, Excel, PowerPoint), communication tools (Outlook, Teams), cloud storage (OneDrive, SharePoint), and security tools (Defender, Intune). In 2026, AI via Microsoft Copilot now runs across all of them. This guide explains exactly what each feature does and what is new this year.

Key Takeaways

• Microsoft released over 1,100 new features across Microsoft 365 in the past 12 months – this is the most significant update cycle in the platform’s history.
• Copilot Chat is now included at no extra cost in Microsoft 365 Business Standard and Premium – it runs inside Outlook, Teams, Word, Excel, and PowerPoint.
• 430 million people use Microsoft 365 apps globally. Over 90% of Fortune 500 companies trust Microsoft 365 Copilot.
• Microsoft Defender and Intune (device management) are included in Business Premium – features that would cost significantly more as standalone products.
• The biggest 2026 additions are: Copilot agents, AI in SharePoint, video meeting recaps, and new Outlook AI features.
• All features work across Windows, macOS, iOS, and Android – no extra cost for mobile apps.

What Is the Difference Between a Microsoft 365 “App” and a “Feature”?

An app is a tool with its own purpose – Teams, Outlook, Word.

A feature is a capability within that app – MFA in Outlook, live captions in Teams, Copilot in Word.

Microsoft 365 is a platform. The apps are the building blocks. The features are what you actually use to do work.

This guide covers both – the apps and the standout features inside each one – so you can understand what your subscription actually includes.

Productivity App Features

Word – More Than a Word Processor

Word is the go-to tool for any document your business produces – contracts, proposals, reports, letters, policies.

Key features worth knowing:

Real-time co-authoring – multiple people edit the same document at the same time. Each person’s cursor shows in a different colour. No more “who has the latest version?”

Track changes – every edit is recorded with the editor’s name and timestamp. Reviewers can accept or reject individual changes. Essential for any document review process.

Version history – go back to any earlier version of the document with one click. Accidentally deleted a section? Restore it in seconds.

Copilot in Word (2026) – type a prompt and Copilot drafts a full document. Summarise a long document in one click. Rewrite a paragraph in a different tone. You can now use Copilot to insert new content and review it as tracked changes – so you stay in control of every edit.

Templates – hundreds of pre-built document templates for common business needs, from invoices to meeting agendas.

Which plan: Web version in all plans. Full desktop app in Standard and Premium.

Excel – Data Made Manageable

Excel handles numbers, data, and analysis. Accountants, operations managers, and project managers use it every day.

Key features worth knowing:

Pivot tables – summarise thousands of rows of data into a readable table in seconds. No formula knowledge required.

Power Query – pull in data from external sources (databases, web pages, other files) and clean it automatically.

=COPILOT function (2026) – a new =COPILOT function in Excel lets you generate, classify, and summarise text and data directly inside spreadsheet formulas. Type what you want in plain English, and Excel writes the formula.

Copilot in Excel – describe what you want to analyse in plain English (“show me which products had the lowest margin last quarter”) and Copilot creates the analysis, chart, or formula automatically.

Conditional formatting – highlight cells automatically based on their value. Instantly see which figures are above or below target without manual scanning.

Which plan: Web version in all plans. Full desktop app in Standard and Premium.

PowerPoint – Presentations That Actually Get Made

PowerPoint is presentation software. In 2026, Copilot has changed how presentations are created from the ground up.

Key features worth knowing:

Copilot in PowerPoint (2026) – PowerPoint is now agentic on the Web, letting users create, edit, and refine presentations through natural conversation. It connects to brand kits so you can apply branded templates and check for brand compliance automatically.

Designer suggestions – PowerPoint automatically suggests professional layouts when you add content. No design skills needed.

Edit with Copilot for formatting – standardise fonts, font sizes, and bullet styles across all slides at once automatically, eliminating manual formatting adjustments.

Presenter Coach – practice your presentation and get AI feedback on your speaking pace, filler words, and eye contact.

Rehearse with Coach – timing rehearsal that suggests where to speed up or slow down.

Which plan: Web version in all plans. Full desktop app in Standard and Premium.

Communication Features

Outlook – Email That Works Harder

Outlook is the email and calendar app. Most businesses already use it. But most are using 10% of what it can do.

Key features worth knowing:

Focused Inbox – automatically separates important emails from lower-priority ones. Your most relevant messages are always at the top.

Copilot email drafting – click “Draft with Copilot,” describe what you want to say, and Copilot writes the email. Pick a tone (formal, concise, friendly) and adjust the length.

Copilot email summarisation – open a long email chain and click “Summarise.” Copilot gives you a bullet-point summary of the key discussion points and decisions in seconds.

Proactive reply drafts (2026) – Copilot detects emails most likely to need a response and pre-generates three reply options for you to review and select from.

Shared calendars – see your whole team’s availability when scheduling meetings. No more back-and-forth to find a free slot.

Microsoft Bookings integration – add a booking link to your email signature so clients can book time directly without emailing back and forth.

100GB mailbox storage – as of the June 2026 update, all Microsoft 365 business plans include 100GB per user (up from 50GB).

Which plan: All plans.

Microsoft Teams – Where Work Happens

Teams combines video calls, team chat, file sharing, and app integrations in one place. Microsoft Teams has over 320 million monthly active users globally – more than any competing collaboration platform.

Key features worth knowing:

Channels – create dedicated spaces for different teams, projects, or departments. Everyone in a channel sees the same files, conversations, and updates.

Live captions and transcription – Teams automatically captions every call in real time. The transcript is saved and searchable after the meeting ends.

Meeting recap with Copilot – after a meeting, Copilot generates a written summary with key decisions and action items. You can ask Copilot questions about the meeting (“What did Sarah say about the deadline?”) even if you were not there.

Video recap (2026) – Copilot now generates a video recap alongside the written summary – a narrated highlight reel combining key takeaways with short, relevant clips from the meeting.

Copilot Chat in Teams (2026) – Copilot Chat is now accessible across Teams chats, channels, calling, and meetings – ask it questions about your project, draft messages, and get instant context on any conversation.

Together mode – puts all meeting participants in a shared virtual space rather than individual grid boxes. Makes long meetings feel less isolating.

Teams Phone – make and receive regular phone calls through Teams using your existing business number (requires calling plan add-on).

Which plan: All plans include Teams. Teams Phone requires an additional calling plan or Direct Routing setup. Our Microsoft Teams guide covers setup for Australian businesses.

Cloud Storage Features

OneDrive – Your Files, Everywhere

OneDrive is personal cloud storage – 1TB per user across all business plans.

Key features worth knowing:

Desktop sync – files in OneDrive appear in File Explorer on your desktop, just like local files. They sync automatically. If your laptop dies, everything is safe in the cloud.

Version history – restore any file to a previous version. Accidentally overwrote a document? Recover the version from an hour ago.

Personal Vault – an extra-secure folder within OneDrive that requires a second form of verification to open. Perfect for sensitive documents.

Ransomware detection and recovery – OneDrive detects ransomware patterns and alerts you. You can restore all affected files to their state before the attack.

Agents in OneDrive (2026) – create a Copilot agent that understands an entire set of related documents – plans, specs, meeting notes, research – and answers questions across all of them at once.

Which plan: All plans. See our OneDrive guide for setup and backup configuration.

SharePoint – Your Team’s Intranet

SharePoint is the shared file and information hub for the whole organisation. Where OneDrive is personal, SharePoint is communal.

Key features worth knowing:

Team sites – create a dedicated site for each team or project. Everyone in the team accesses the same files, news, and resources.

Intranet pages – build a company intranet without any coding. Add news posts, announcements, policies, and org charts that every employee can see.

AI in SharePoint (2026) – previously called “Knowledge Agent,” SharePoint now includes built-in AI that helps employees find information across the organisation’s content. Ask a question in plain English and it searches all your SharePoint sites to find the answer.

External sharing controls – share specific files or folders with clients or partners without giving them access to your whole SharePoint environment.

Rich Teams integration – every Teams channel has its own SharePoint document library behind it. Files shared in a Teams channel are automatically stored in SharePoint.

Which plan: All plans. See our SharePoint guide for Australian business setup.

Security Features (Business Premium)

The security features in Microsoft 365 Business Premium are what separate it from a simple productivity subscription. These features are why most Australian businesses should be on Business Premium.

Microsoft Defender for Business

Defender is Microsoft’s built-in antivirus and endpoint security tool. It runs on every Windows device enrolled in Intune.

Key features:

Real-time malware protection – scans files and processes continuously. Catches threats before they execute.

Attack Surface Reduction (ASR) rules – blocks specific attack techniques at the Windows kernel level. Stops ransomware delivery methods, credential dumping, and script-based attacks.

Automated investigation and remediation – when Defender detects a threat, it automatically investigates and contains it. Quarantines malicious files, reverts changes, and provides a full incident report – without waiting for an IT person to respond.

Threat and Vulnerability Management – continuously scans your devices for unpatched software and misconfigured settings. Gives each vulnerability a risk score and a remediation recommendation.

See our EDR services guide for how Defender integrates with managed security monitoring.

Microsoft Defender for Office 365

This protects your email and collaboration tools from phishing, malicious attachments, and dangerous links.

Key features:

Safe Links – every URL in every email is checked at the moment you click it (not just when the email arrived). If a link becomes malicious after delivery, Safe Links blocks it.

Safe Attachments – every email attachment is opened in a sandboxed environment before delivery. Malicious files are blocked. Clean files are delivered.

Anti-phishing protection – detects impersonation attempts (emails pretending to be your CEO or a supplier) using machine learning.

Which plan: Business Premium includes Defender for Office 365 Plan 1. See our email security guide for configuration details.

Microsoft Intune – Device Management

Intune lets your IT team manage every device in the business from a single cloud console.

Key features:

Compliance policies – define what a “healthy” device looks like: encrypted disk, minimum OS version, antivirus active. Devices that do not meet the standard are automatically blocked from accessing company data.

Remote wipe – if a device is lost or stolen, wipe it completely from the Intune portal. No physical access needed.

App deployment – deploy software to every device in the business with a few clicks. No USB drives, no manual installation.

Conditional Access integration – Intune reports device compliance to Microsoft Entra ID, which gates access to all Microsoft 365 apps. Non-compliant device = no access.

Our endpoint hardening checklist covers the specific Intune policies Australian businesses should configure.

Microsoft Entra ID (Formerly Azure AD)

Entra ID is the identity system that controls who can log in to what.

Key features in Business Premium (Entra ID Plan 1):

Conditional Access – apply rules that must be met before granting access. Examples: require MFA for all sign-ins, block access from countries you do not operate in, require a compliant device. See our conditional access policy examples.

Single Sign-On (SSO) – one login grants access to all connected apps – Salesforce, Xero, your HR system, and thousands of others. See our SSO implementation guide.

Self-Service Password Reset – users reset their own passwords without calling IT. Saves hours of helpdesk time every week.

Which plan: Entra ID Plan 1 is included in Business Premium only.

Microsoft Purview – Data Protection

Purview classifies and protects your sensitive information – wherever it lives.

Key features:

Sensitivity labels – tag documents and emails as Public, Internal, Confidential, or Highly Confidential. Labels travel with the file.

Automatic encryption – Confidential files are encrypted automatically. Even if someone shares a file with the wrong person, they cannot open it.

Data Loss Prevention (DLP) – blocks users from accidentally sending sensitive information (credit card numbers, tax file numbers, patient data) outside the organisation via email or Teams.

DLP for Copilot (2026) – Purview DLP now prevents users from using sensitive information in Copilot prompts for web search – protecting your confidential data from being sent to external AI searches.

This is directly relevant to the Australian Privacy Act – Purview helps you demonstrate that personal information is classified and controlled. See our Microsoft 365 security guide for configuration.

Microsoft Copilot – The AI Layer Across Everything

Microsoft Copilot is not a separate app. It is an AI assistant built into every Microsoft 365 app.

Two tiers exist:

Copilot Chat (included in Standard and Premium) – available in Teams, Outlook, and via the web. Answers questions about your emails, files, and meetings. Drafts content. Summarises documents.

Microsoft 365 Copilot (paid add-on) – deeper integration inside Word, Excel, PowerPoint, and Teams. Agents that can take multi-step actions across apps. Access to the full Microsoft 365 Copilot feature set.

What is new in Copilot in 2026:

• Copilot agents – automated workflows that can act across multiple apps without human input (create a document, email it, update a spreadsheet, all from one prompt)
• Video recap in Teams meetings – narrated highlight reels from meetings
• =COPILOT function in Excel – AI directly inside formulas
• Agentic PowerPoint – create a full presentation from a conversation
• Work IQ – a personalisation layer that learns your communication style, typical workflows, role context, and relationships over time – making Copilot responses increasingly tailored to you.

Over 90% of Fortune 500 companies now trust Microsoft 365 Copilot – the AI adoption curve in enterprise has been steep and fast.

See our Microsoft 365 Copilot pricing Australia guide for current costs and plan options.

Which Features Come With Which Plan?

For Australian pricing (ex-GST, annual billing as of June 2026): Basic AU$9.00 / Standard AU$18.70 / Premium AU$32.90 per user per month. Check Microsoft Australia’s pricing page for current rates.

Related Reading

• What Is Microsoft 365 Used For – The overview of what M365 is and when to use it
• Microsoft 365 Security – Configuring the security features in depth
• What Is Microsoft Entra ID – The identity and access management platform behind M365
• Entra ID Protection – Risk-based identity security features
• Microsoft 365 Copilot Pricing Australia – What the paid Copilot add-on costs
• SharePoint Library Guide – Using SharePoint document libraries effectively
• M365 Backup Solutions – Why Microsoft 365 still needs a separate backup
• Endpoint Hardening Checklist – Configuring Defender and Intune correctly

Frequently Asked Questions

What features are included in Microsoft 365?

Microsoft 365 includes four categories of features: productivity apps (Word, Excel, PowerPoint, OneNote), communication tools (Outlook email, Microsoft Teams for meetings and chat), cloud storage (OneDrive for personal files, SharePoint for team files), and – in Business Premium – security tools (Microsoft Defender, Intune device management, Entra ID Conditional Access, and Microsoft Purview data protection). Business Standard and Premium plans also include Copilot Chat, which adds AI features across all apps.

What is Microsoft Copilot and is it included in Microsoft 365?

Microsoft Copilot is an AI assistant built into Microsoft 365 apps – Outlook, Teams, Word, Excel, and PowerPoint. Copilot Chat (the entry-level version) is included at no extra cost in Microsoft 365 Business Standard and Premium from 2026. The full Microsoft 365 Copilot experience – with deeper agents, agentic workflows, and complete app integration – is a paid add-on. Copilot Chat can draft emails, summarise documents, answer questions about your files, and recap meetings.

What is the difference between Microsoft Defender and Defender for Office 365?

Microsoft Defender for Business protects your devices – laptops, desktops, and servers. It provides antivirus, endpoint detection, and attack surface reduction. Microsoft Defender for Office 365 protects your email and collaboration tools – it checks every link and attachment in emails for malicious content before delivery. Both are included in Microsoft 365 Business Premium. Together they cover the two most common attack paths: compromised devices and phishing emails.

What does Microsoft Intune do?

Microsoft Intune is a cloud-based device management tool included in Microsoft 365 Business Premium. It lets IT administrators enrol all company devices, enforce security settings (like BitLocker encryption and minimum OS versions), deploy software remotely, and remotely wipe lost or stolen devices. Intune also reports device compliance status to Microsoft Entra, which then gates access to Microsoft 365 apps – non-compliant devices are automatically blocked from logging in.

What is SharePoint used for in Microsoft 365?

SharePoint is the team file storage and intranet platform in Microsoft 365. It stores shared documents for teams and departments, hosts internal news and company announcements, and provides a searchable knowledge base for the whole organisation. Every Teams channel has a SharePoint document library behind it – files shared in Teams are automatically stored there. In 2026, SharePoint added AI-powered search that lets employees ask questions in plain English and receive answers drawn from all organisational content.

Does Microsoft 365 include backup?

Microsoft 365 includes version history (allowing you to restore earlier versions of files) and recycle bins (allowing you to recover deleted items for up to 93 days). These are not the same as a true backup. Microsoft’s shared responsibility model places the obligation to back up your data on the customer. A separate Microsoft 365 backup solution – either Microsoft’s own M365 Backup (paid add-on) or a third-party tool – is recommended for businesses that need assured recovery of email, Teams, and SharePoint data. See our M365 backup solutions guide.

What are the new features in Microsoft 365 in 2026?

The major new Microsoft 365 features in 2026 include: Copilot Chat included at no extra cost in Standard and Premium plans; Copilot agents that automate multi-step tasks across apps; video meeting recaps in Teams (narrated highlight reels from meetings); the =COPILOT function directly inside Excel formulas; agentic PowerPoint creation via conversation; AI in SharePoint for organisation-wide knowledge search; Purview DLP for Copilot prompts; and Work IQ personalisation that learns each user’s communication style over time. Over 1,100 new features were added across Microsoft 365 in the past 12 months.