what exactly Skydrive is and what is its purpose and what is it used for

I'll try to answer at least a few of your questions; the ones I can, but there are some I cannot.

SkyDrive is a "cloud" file storage location.  You set up an account and it creates an area that looks much like the folders on a drive in a storage area provided by Microsoft:

Documents, Favorites, Office Live Documents, Pubilc and Shared Favorites are the folders created by default.  You can create more folders, and of course folders within them.

I frankly don't make a lot of use of all of its features, mostly posting Excel files I create to assist people in this forum so that they can download them and see the details of the help offered.  One thing it does do is give you access to files stored on it from any location where you have an internet connection.  You can always download a file, work on it on whatever system you are using and save the changed file back to the SkyDrive.

Now whether you can set up Excel so that the default location is a folder on your SkyDrive or not, well, that's one area I haven't explored and cannot answer.

But perhaps having a general idea of "what it is", which I hope I've given to you, you can take it a little further with other guidance or just plain experimenting in Excel and with SkyDrive.

Remember, in Excel's options there is a setting for the default file locations - I don't know of an reason you couldn't set that up as a URL to your SkyDrive although I'm not certain how the logon would be accomplished automatically unless you set your system up to remain logged in/automatically log in when you connect to it.

You might also be interested in this discussion which is about setting things up in Excel to use SkyDrive:

http://answers.microsoft.com/en-us/office/forum/office_2010-excel/how-can-i-change-the-skydrive-account-used-in/6c09652f-0238-4456-9a66-3878c3ea0b8f