I think you're missing the context. Office Online/OneDrive/etc. already implement more or less the default behavior you recommend. docs.com is a separate servic

I think you're missing the context. Office Online/OneDrive/etc. already implement more or less the default behavior you recommend. docs.com is a separate service intended specifically for public sharing, i.e., it's a platform to which you post or publish. I would guess this is less of a technical or UI design problem and more of a branding/product concept/positioning problem, i.e., (some) people don't seem to understand the overall concept of the product, possibly because of the name