With a Microsoft account, you can access all Microsoft services with a single username and password on your computer or phone. You can also use the same username and password on your Xbox.
With your Microsoft account, you can, for example:
Download content from Store
Back up your contacts
Upload, store, and share pictures and documents.
Back up your phone on SkyDrive.
Play Xbox games
Get your avatar and gaming achievements on your phone, and add to them when you play games on your phone
Keep track of and lock your lost phone with Find My Phone
Get feeds from social networking services to your People hub
To learn more about Microsoft account and what can you do with it, go to http://www.windowsphone.com/.