There are three ways to copy objects from one application to another in MS Office.

The last two are known as OLE. Object Linking and Embedding, or OLE, is a way to ensure that your documents are always up-to-date.

When you have copied and pasted an object into your document, you edit it as an object of that application. For example, a range of cells in Excel or a table in Access becomes a table in Word. A chart from Excel becomes a picture in Word. Any changes you make to the objects in your document have no effect on the objects anywhere else. When you link an object to a document, the object is "alive". When you open and edit it in its native program, those changes are reflected in the object in your document. When you embed an object in a document, you keep it in its "native format", which can still be edited as that kind of object. A spreadsheet stays as a spreadsheet, for example.

The main differences between linked objects and embedded objects are where you store them and how you update them, if need be, after you place them in the target file (in this case, your document).

Linked object A linked object is created and stored in a separate source file, and then it is linked to the target file. Because the two files are linked, when you make changes to one file, the changes appear in both the source and target files. When you link your document to some external data object, your document records a pointer to the source of that data. If the source changes, your document will change accordingly.

Embedded object An embedded object is created in an application in a separate source file too, but then it is inserted into the target file, becoming part of that file. If you make a change to the original source file, the change will NOT show up in the target file.

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

When you double click on an embedded object, you get a reduced functionality program to edit it with. It will not be the same as the full Word or Excel or Powerpoint program. When you double click on a linked object, you get the full functionality program opened up to let you edit the object.

When you double click on an embedded object, you can make changes right there. The changes take effect on the object in the target document immediately, but the original (source) object is NOT changed. When you double click on a linked object, you are making changes to the original (source) object. These changes are also shown on the object in the target document.

How do you know whether to use links or embeddings?

Summary
MethodProperties
Copy and PasteThe object from the source document becomes part of the target document. The object can be edited but only the abilities of the current application will be available. No formulas are recalculated or data is sorted, for example.
Copy and EmbedThe object from the source document becomes part of the target document file. The object may be edited using abilities of the source application. Formulas will be recalculated. Changes made to the object in one document will NOT be reflected in the other document.
Copy and LinkThe object from the source document does not really become part of the target document. Instead a link is established between the two documents. The two document files would both have to be transferred to a new location to display properly. Changes made to the object in either document are reflected in the other.

Oddities about linking and embedding

If the path name of a linked file exceeds 128 characters, Microsoft Office PowerPoint is not able to find and play that linked file. In such a case, you can either rename the linked file, or shorten the path name by copying the linked file into the folder where your presentation is located. Then either update links automatically by using the Package for CD feature in Powerpoint, or update them manually by removing the sounds from the presentation and then adding them again.

Powerpoint has an upper limit of 50 Mb on a sound file to be embedded. Larger files than that will not play unless they are linked. Also, embedded objects larger than 100 Kb may slow down the presentation.