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It has to do with who will be using your files and what versions of the software they have. Virtually all major software packages, including Microsoft Office, are backward-compatible, which means that you can work with files that were saved in older versions of the software. However, you often cannot open files saved in newer software versions if you are using an older version. For example, in Excel 2007, in addition to the normal Save function, you also have the option of saving your workbook as an Excel 97-2003 file. Both the normal save and the 97-2003 save have their drawbacks. If you save your file normally, you are limiting the range of your audience, because people using older versions of Excel won't be able to open it. If you save it as a 97-2003 version, you are limiting what functions you can use to make the file look and behave the way you want. Obviously, every new software version has more "bells and whistles" than the previous version. By saving as a 97-2003 version, you are limiting yourself to only the functions that were available in those older software versions. When using a newer Excel version and saving your workbook as an older format, the Compatibility Checker will let you know what characteristics of your workbook, if any, are not compatible with the version in which you are trying to save it. Of course, if your file is only for your personal use, you need not concern yourself with the 97-2003 save option. BTW, you can tell which Excel files are compatible with Excel 97 etc. by the file extension. Files saved in newer Excel versions and that are not compatible with the older versions have four-letter extensions instead of three-letter. For example, for regular Excel files (not templates, no macros, etc.), older versions have the extension .xls, and newer versions have the extension .xlsx.

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