When you embed another application’s data in Microsoft Excel 2010, your workbook stores a complete copy of the source data. Because you have a complete copy (a paragraph from Microsoft Word 2010, for example, or a voice annotation created in a sound-recording program), that information remains intact even if the source is destroyed or becomes otherwise unavailable. But the embedded copy is independent of the source. The source might change, but the embedded copy does not.

When you link your Excel 2010 workbook to external data, the workbook records a pointer to the source of that data; if the source data changes, your workbook changes accordingly. Whether it changes automatically to match the source or only when you request an update depends on options that you set. In any event, your Excel document retains a connection to the source.

Excel displays information that you link or embed if it is in a text or graphic format that Excel recognizes. You can also choose to display a linked item as an icon rather than as the actual text or graphic. When you double-click the icon, Excel “renders” the information (plays the sound clip or video, for example), provided an application capable of rendering it is available.

In some cases, Excel might display only some of a text document that you link or embed. If you link or embed a multipage Word document, for example, your workbook displays the first page only. To see the rest, double-click the first page.

Because embedding typically stores more information in your Excel document than linking does, embedding tends to generate larger files. If minimizing file size matters, you should favor linking over embedding. You should also link if you need Excel to update your workbook automatically when the source data changes.

On the other hand, if you need to take a document that is linked to a file on a remote computer on the road with you, you’ll want to embed the file instead. Otherwise, Excel won’t be able to find the linked file when you’re offline.