When a user chooses to edit an Office file that has been uploaded to the SciNote cloud, this file is uploaded to a Microsoft Office Online server and the editing is done on that server. The edited file is then periodically saved back to SciNote.
Microsoft requires an active account with online editing rights for all business users, but the login is shared between the many different Microsoft services, so if some of your users have already logged into one of them, they will not be required to log in again when they start editing a file.
Free users are not required to have a Microsoft account to use Microsoft office.
This login is NOT requested by SciNote, and SciNote does not have access to your Microsoft account credentials.
To completely remove the need for a login for business users and to use the software installed locally on your computers you would need to download a file from SciNote, open the downloaded file, update it and then upload it back to SciNote.
Please note that if you have Microsoft Office 365 subscriptions some »in-country« account types can cause users that they are unable to login. This happens because the authentication system for such accounts is completely separate from the standard account system. This applies to any account using Office 365 Germany (microsoft.de) or similar "in country" account types, or government account types which also mandate that data stay within a specific country. These account types all have separate auth systems.