You will need to have edit rights to a document to be able to edit it in Office Online.
Editing office online documents
Once Open in Office Online is enabled in your site, you will be able to create and edit Microsoft Office documents directly within the Files module. To edit office online documents, navigate to the Files module, and select your word document. Click More actions > Open in... > Word Online.
Additionally, you can access this menu option from the document preview screen, by navigating to More actions > Open in... > Word Online:
If you have selected a powerpoint document or an excel document, the option here will be Open in... > Powerpoint Online or Excel Online respectively.
A new tab will open, which will ask you to log in to your office online account.
To ensure that the new tab is opened, you need to disable any pop-up blocker and ensure that 3rd party cookies are enabled.
Once you have logged in, your Word document is displayed:
In this screen, you can make any edits to your document. Additionally, multiple users can join you during the editing session. When another user joins you, you are notified at the top right of the screen about the user that has joined the editing session and you can see where they are editing directly on the document:
While you and other users are editing the document, the document will be regularly autosaved.
When the last person who is editing the document, leaves the document, a new version of the document is created in Collaborate and displayed within the files list. This document will contain all changes made by all users during the editing session.
Creating a new office online document
To create a brand new document in Office Online, navigate to New > Word Document:
The New Word Document screen is displayed:
Enter the name of your document, and select where you want the document to be located:
Click Select to select a location, then click Save to create your new word document. A new window will be displayed, showing the same Office Online screen shown above. Now add content and collaborate with other users as described in the Edit section.