But it doesn't integrate with the file system. On the desktop (at least on Windows), you still have a regular folder that syncs, full of folders regular files that sync - except now, you can make some of those files and folders to only look real, but actually store no data on the drive itself, and transparently fetch it when needed. It integrates completely seamlessly with all the other software you use on the machine.

(I think a good Linux analogy would be FUSE, things like sshfs.)