Just to confirm, at the time of posting:
Regardless of Office Sync opt-out settings, all Office 2016 applications are exhibiting one of two
opposite behaviours when opening and saving files directly from / to a local instance of a OneDrive folder,
depending on whether the file is created inside or outside
of that OneDrive folder:
Steps to reproduce:
Case 1: Office file is created outside of the local instance of a OneDrive folder and moved into it.
1.) Create and save an Office document in any local folder outside of the local instance of a OneDrive folder.
2.) Using Windows Explorer, move the file into the local instance of a OneDrive folder.
3.) Open the file <- Only the local instance is accessed, not the online instance.
4.) Save the file <- Only the local instance is accessed, not the online instance.
This is the expected behaviour: all syncing is performed as a background task by OneDrive.exe, not the Office application.
Case 2: Office file is created within the local instance of a OneDrive folder.
1.) Create and save an Office document directly within the local instance of a OneDrive folder.
2.) Close the file.
3.) Open the file <- Only the online instance is accessed, not the local instance.
4.) Save the file <- Only the online instance is accessed, not the local instance.
This is completely undesired behaviour. Office Sync opt-out settings are being ignored and all syncing is being performed at the time of opening and saving by the Office application, not OneDrive.exe.