That sounds like an extreme amount of incompetence to me. I understand that you run into this problem with third party software like Dropbox, because they aren

That sounds like an extreme amount of incompetence to me. I understand that you run into this problem with third party software like Dropbox, because they aren't natively integrated with the OS and therefore need to do some unreliable file tagging to support basic operations like renaming, moving or copying files, but Microsoft controls the entire OS. They can scan the filesystem journal for file system operations. They can build custom OneDrive specific features into their file explorer. They have an office suite that can directly integrate with OneDrive. Yet they chose to not do that and instead decided that they really ought to collect all your data for training AI instead.