To be clear, it does also support Sharepoint, which some larger businesses have, so using the cloud is not mandatory. But not supporting local file storage might be OK on an iOS device where the file system is hidden from the user, but not on Android which has decent support for local and SD card storage.
Smacks of Microsoft wanting to own all of their users' data. I'll stick with Kingsoft Office or OpenOffice for Android, thanks very much. I really don't want to upload all of my private data to the Great Fluffy Mothership in Redmond, nor do I intend to pay for a license to run a Sharepoint server.