a new list of View filters that exist horizontally above the message list. These include All (the default), Unread, From contacts, Social updates, From groups, and Everything else, and as you can probably tell from the names, they serve the simple and useful purpose of filtering the current view to only show specific kinds of email. To the far right of this list is a little Arrange by gadget as well. If you click this, you can sort the list of messages by Date (the default), From, Subject, Size, or Conversation.
Before heading off into a look at specific features, it may be worth mentioning that the Options link, which as before triggers a drop-down menu, has been simplified as well. In the previous Hotmail, you could access language, (some) themes, and reading pane options, with a separate link triggering the full-page options view. Now, themes have been moved to a separate menu off of your profile link at the top of the page--which makes sense, since the theme you choose is applied across numerous Windows Live services--and the Options menu itself just has reading pane options and a link to that full page options list.
Speaking of that Options page, there are some changes there as well, all related to the functional changes in this Hotmail version. The Today page is on the way out, which is just fine, replaced by the Windows Live Home page. And there are options around new features like Active Views, Conversation View, and rules, the latter of which presents a slight overhauling (with major language changes) of the previous "Automatically sort e-mail into folders" functionality.
One other aspect of Hotmail deserves a quick look from a UI perspective. Contacts has been slightly updated. The actual list of contacts is largely identical to that of the previous version, but there have been some language changes that I think will make sense to people. Last time, contacts sources were referred to as your "Networks," and these could include such things as Messenger, your (Windows Live) profile, and so on. In the new Hotmail, these sources are considered services, or "connected services," which they are, and you can now manage them explicitly. They include any services you connect to Windows Live or, in my case, such thing as the Zune Social, Facebook, and the like.
Calendar, disappointingly, appears to be identical to the previous version. I don't believe it's changed at all from a UI perspective. Fortunately, there are major changes under the hood that make all the difference in the world. We'll get to those, of course.
These UI differences, of course, refer only to the web-based version of Hotmail. As it turns out, there is a new mobile web version of Hotmail, too, and it is also dramatically improved over its predecessor. Don't worry, I've got a bunch of info about that as well, and about some other interesting and important changes in the mobile space.
OK enough set up. Let's find out what's new in Hotmail from a functional perspective.