SharePoint integration enables you to have document management capabilities within Microsoft Dynamics CRM. It uses the Microsoft CRM List Component for SharePoint, allowing documents to be accessed from within the CRM system.
See our blog Setting Up Microsoft CRM Online with Sharepoint Online on how to do this
An example of how this might be used would be for the you to add a document folder to a customer's account in the CRM. This would then allow you to store the customer related documents against the account. By going into the account you can then easily access, view and edit their documents. The great thing is that these documents are also available to non-CRM users as well via SharePoint (assuming they have the appropriate user permissions).
Lots of additional document management functionality can be added to the solution, however the out of the box functionality is already very usable and low cost. Integration to other document management systems can also be handled, but SharePoint is usually the most popular option.
The following video shows how the integration is used...