It seems there is some controversy (1) (2) around whether Live Mesh is good or bad. Here is my 2 cents: I've installed Live Mesh Tech Preview about a month ago and am pretty impressed by it so far. It seems to me Microsoft may have found the tool that will unify the desktop (where they make their money) with the cloud (revenue?). Currently there are two features that I use and like:

a) Sync files automatically with all machines in my Live Mesh group of devices
b) If my Live Mesh device is on, then I can use Remote Desktop Connection (or a Live Mesh version thereof) to remotely connect to that device. Even if it is behind a firewall and on a dynamic IP DSL connection. This is great because my machines at the office are connected to the Internet via a dynamic IP connection and now I can just connect to them, by clicking them via the Live Mesh icon in my icon tray.

The sync files feature will be further improved in the future when Peer 2 Peer synchronization will be supported. I suggested this feature on MS Connect, but it was already planned
Here is the response I got:

We plan to include selectable direct Peer to Peer (P2P) as a sync scenario in a later milestone, which is in effect what you have asked for here I believe.
Thank you for this report!
Tim

I use a lot of Virtual PC images. I'm hoping I can use this P2P sync service to create continuous backups (don't know if the bandwidth needed will prove to be a killer).

What is interesting is that files on Live Mesh will sync, even if the user is not signed in. This means that on the client Live Mesh is connected to the cloud without a user logging on. This offers potential for an interesting feature like 'Live Mesh Lockdown'. Suppose my machine is stolen. I could use some other device, go to the Live Mesh Desktop on the web and mark the device as stolen. This could lead to the machine being locked for further use. I have no idea what information is stored on the server with regards to the device. Perhaps this feature could even become part of the next version of Windows. That way if the thief re-installs the machine the server can still recognize the device (based on MAC address?) and still lock the machine.

Anyway, can't wait to see what the developer API for Live Mesh looks like.