Presence tells us if someone is online somewhere. Current IM systems maintain their own user registry and provide presence to registered users. As we move away from private solutions we need a service that provides online status regardless of whether the user has an IM client open, in a virtual world or on a mobile phone. The presence server does not release information about a user unless the user wishes it. The status information expands from just online status to include how to connect to the user no matter how they are connected.
Bob signs on to the internet. He wishes to contact his friend Mary who is on his buddy list but he does not know if or how she is connected. Mary may have a standard IM client open, she may have her cell phone on or she may be immersed in a virtual world. Bob finds her online status thru a common presence service, which can then notify Mary that Bob wishes to communicate with her. She can then (automatic if preferred) release information to Bob that will allow him to communicate with her.