Answer
Presence is the ability to see the online status of all the users who are members of your buddy list and for all of these users to be able to see your status.
If the presence of a user is known, you can immediately tell which of your buddies is contactable, unlike a telephone where you have to call them up and wait to see if they answer.
Future versions will make Presence information automatically available by reading the information available in a users Calendar and/or Schedule and updating the status dependant on this information. So if a user is scheduled to be in a meeting you will immediately be aware that that user can not be contacted at the moment as their status will have been updated to show that they are busy.
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Keywords:presence