How Microsoft Outlook Reads Mail.
When an email account is added to your Outlook program, a local copy of the data is stored on your computer. This allows you to access your previous downloaded or synced messages, calendar data, and contacts without a connection to the internet. Some Outlook accounts, like POP accounts, will store information in Outlook Data Files with the “.pst” (personal storage table) file extension. Others will create Offline Outlook Data Files with the ".ost" (offline storage table) extension.
An Outlook Data File (PST) contains all of your messages and any other Outlook item which is saved to your local computer. POP or IMAP accounts were quite common to see on a computer before cloud email became popular and they both use PST files to store email data from the account. These files are beneficial because you have full control of what gets saved directly to that file without having to wait and sync with the cloud server. You can also backup your data by exporting specific items or archiving email. The physical mobility of the PST file is superior to the .ost with the added function of being able to import messages from other accounts into it. Offline Outlook files cannot import or export unless you convert them prior to doing so.
Since the data is stored on your local computer, you are not limited to the size of the Outlook file. With an OST, you have the storage limitation of what you currently pay for in your mail service. However, you can always convert old email data to a PST and archive them by moving if off of the cloud server and onto your local hard-drive. Of course, the limitation there is that you can now only access that data on the computer it was exported to, unless you physically move the file to another PC.
Offline Outlook data files (OST) are quite different since they are a synchronized copy of your actual mail data. Office 365 accounts, Exchange accounts, and Outlook.com accounts all use this file type. The local synced copy allows you to access previously synced mail even when disconnected from the internet. You can also compose new messages and create new appointments; however, they wont be sent an no incoming messages will be seen until your internet connection is back online. When it is connected to the internet again, the changes you made while offline are automatically synced and the all items are back to being identical between the server and your Outlook program.
There are a few caveats, however. When the Offline cached file of an original mailbox is no longer available, the OST file becomes “orphaned.” Orphaned OST files when not connected with any exchange server environment will become inaccessible and you won't be able to open and view its data. When this occurs, you must use a third party OST to PST converter to view the information again. OST files can only be accessed by the original Outlook profile and email account that created it. Additionally, if you delete the mail profile that has the OST file in it, that file will also be deleted, and you cannot get it back until you re-create the profile.
There are pros and cons to both file types, but the simplicity and security of OST mail accounts makes them much more desirable in an environment that is constantly changing and on the run, which is why cloud hosting is rapidly becoming the new standard for businesses. Because it synchronizes with the main mail server, all changes are instantly stored in the cloud. There is no confusion of which PST file has which emails in them and there is no worry about losing or misplacing the files. In this case, the only thing that matters is the data stored in the cloud. If handing the burden of keeping your data safe to a company as large as Microsoft or Google is still concerning, you can either pay a third-party backup service to backup your cloud email, or you can even convert your OST to a PST and store it locally as an incremental backup. The former being the more advised option, as additional backups will always be a good idea, especially now when nearly everything can be digitally compromised.