From the Windows Live blog at Shorter, more useful links with SDRV.MS by Omar Shahine, Group Program Manager,

Sharing with links just got a bit friendlier:

  • We’ve shortened our regular URLs by 40%. Our previous URLs didn’t even fit inside a Tweet! Oh the shame!
  • You can shorten them even further thanks to our new partnership with bitly and the new domain for shortened SkyDrive URLs:
  • We’ve added OpenGraph support to our URLs so that when you paste them into places like Facebook, a nice thumbnail preview gets generated

Shorter links

As you can see in the Share dialog, there is a Shorten button

Shortening using our own custom domain

Clicking the button will result in a very short URL using the SDRV.MS domain

Additional information at the source.