What's the key difference between the Office 365 E1 and E3 plans?

With the E1 subscription, you don't get the Microsoft Office client, just the browser-based Office web apps for Outlook, Word, Excel and PowerPoint. You can, however, use an existing version of Office. The minimum supported version is Office 2010 with some reduced functionality compared to Office 2013 and 2016.  E1 also includes email, file storage (OneDrive for Business), real-time collaboration (SharePoint), communication (Yammer) and instant messaging and online meetings (Teams). 

E3 Subscriptions include all the features in E1 with Microsoft Office apps available on desktop, web and mobile.  It also has continuous automatic updates to the latest Office version.  It also includes services for PowerApps, Stream, Flow and ToDo.