Web Folders is the Microsoft term for an internet connectivity method called WebDAV, though you will see it called simply a “Network Location” in Vista and Windows 7, or a “Network Place” in Windows XP.
WebDAV stands for “Web-based Distributed Authoring and Versioning”. It allows users to collaboratively edit and manage files on remote web servers [...]

There are two common reasons why an Excel or Word file can be opened “read-only” using Web Folders, but cannot be saved back to the My Docs Online Web Folder location.
Folders other than the Group “Root Folder”
If permissions for the sub-account are set to “View Only” the user will be able to open, but not [...]

Advanced techniques for using Microsoft Office and My Docs Online
For users who need to share the frequent updating or editing of Word or Excel files, the ability of the WebDAV protocol used by MS Web Folders to “lock” a file while a user has the file open for update provides a simple yet powerful way [...]

Users can share the updating or editing of Microsoft Word, Excel or Powerpoint files using a combination of My Docs Online WebDAV support and Microsoft Web Folders, without having to worry about the “intervening update” problem. for details see our Solutions Newsletter article: Advanced techniques for using Microsoft Office and My Docs Online.