Difference between .xls and .ods files?

As I found out there are excel sheet files with the filename extension .ods which when double clicked) open in Excel 2007 normally.

So what is the difference betwen these .ods and "normal" .xls files?

Why was a new extension invented?

Peter

.ods are open office files. You'll find that open office can also open .xls but in both cases there will be functions that don't work