When I go to http://devices.live.com/Devices/SkyDriveSyncedStorage, I see a listing of my synced folders. I have only synced one. Clicking on it takes me to https://devices.live.com/Sync/FolderSelf, which is a view of the folder's contents. Inside there is a PDF document. I click on it, and it opens.
I think the confusion is with the naming, the 5GB SkyDrive Synced Storge is actually a separate product than the 25GB SkyDrive. I guess SkyDrive is an unbrella name they're trying to brand all their consumer cloud apps under. It just confuses people. I don't know why they don't use the Azure name. Azure Synced Storage, Azure SkyDrive, and Azure Cloud Services would have made more sense -- to me at least.
Best Answer
I don't think there any restriction of the type of files you can upload but you can only edit or create Office files in the browser.