Open XML is a Microsoft technology which defines file formats. It is based on combining industry standard XML and ZIP technologies and will be Office 2007's standard (i.e. default) format for Word, Excel, and PowerPoint..

The ZIP technology provides a container which compresses its contents – saving hard disk space and making files smaller for sending across a network. This forms a wrapper for a set of XML files that together are the basis of the Office document. The ZIP wrapper also may contain binary files including PNG, JPEG or GIF images. This is one of the most flexible aspects of Open XML: the support for arbitrary embedded objects, which may be any type of binary content. Additionally, it is possible to individually open, read and edit the files in the ZIP container – allowing for recovery of data if part of the Office document becomes corrupt. 

Here is a screen shot of the contents of a simple Word 2007 .docx file using WinZip.