A compound document technology from Microsoft based on its Component Object Model (COM). OLE allows an object such as a graphic, video clip, spreadsheet, etc. to be embedded into a document, called the "container application." If the object is playable such as a video, when it is double clicked by the user, a media player is launched. If the object is allowed to be edited, the application associated with it (the "server application") is launched.
An object can be linked instead of embedded, in which case the container application does not physically hold the object, but provides a pointer to it. If a change is made to a linked object, all the documents that contain that same link are automatically updated the next time you open them. An application can be both client and server. See Object Packager
OLE was originally known as "Object Linking and Embedding." However, with version 2.0, OLE's infrastructure was built on a new component architecture known as COM (Component Object Model) that went beyond compound documents. New capabilities such as OLE automation and Network OLE were widely promoted. Later, Microsoft dropped the use of the term as a marketing brand, although it is still used in technical documentation. See ActiveX Documents
If an object is embedded, the document contains a copy of it. Changes made to the object affect only the document that contains it.
If an object is linked, the document contains a pointer to the original file. When you change a linked object, you are changing the original, and all the documents that link to that object are automatically updated.