A compound document is one that contains, along with its native data, one or more objects that were created in other applications and therefore have different data formats. Such objects are called compound document objects. An application used to create compound document objects is called an OLE server application. An application whose documents act as object clients is called a container application or, simply, a container. Any given application can be one, or the other, or both.
Compound document objects are essentially OLE components that also implement interfaces that support object linking and embedding. A linked object includes information about the location of its data and the formats necessary to present it on screen to the user, but the data itself is stored elsewhere. An embedded object is one whose data is stored along with that of its container. Applications that support linking and embedding can share data without having knowledge of one another's data structures and without having to implement separate protocols for every other application with which they communicate. Users of OLE compound document applications can embed data created in one application in a document created in another, and can view, edit, or otherwise manipulate that data without having to exit the application in which they are working. Users can also create links in one document to data in another so that changes to data in the source document are updated in the link.