I made a discovery some time back. Just follow these steps:
Create a .doc/.xls/.ppt file in office 2003. Keep some test data in there and close the file. Now rename the file to change it's file extension to a random string, taking care that it is unassociated, like test.asdfghjkl etc. Double click the file and it opens seamlessly in the parent application.
Now AFAIK, windows checks the file extension of the file and uses it to do an action, viz open an application and pass the file to it to open. Then how does the office suite manage to do this?
EDIT: How about the case when the extension is changed to one that is associated with another application. Is there a priority algorithm in place for handling that ?