In an answer provided by EdwinSleepDoc to a similar question in Microsoft Forums, it says
When you open a password protected Word or Excel file on Android Word or Excel, it opens the file and then dumps an unprotected version of that file deep into Android's file system. Later, when you delete the original on your phone, the file still shows up in your Android Word or Excel 'recents' list and you can just tap it and open it. It is quite disturbing. It has a long file path usually users>>data>>0 ...
I cannot yet confirm that it is true about password protected files being handled like this, but I have found that this is true of files downloaded and opened from websites or opened from emails.
Following the instructions in the answer, the only way to delete this copy is to go to Settings > Apps > Word or Excel > Storage > Clear data.
This will clear that folder of these files and reset your app. You do not have access to that folder to delete these files individually. This is the only way.
NOTE FOR SENSITIVE FILES: The "remove from list" option within the
recents list does not delete the file from the device. It will remain in that folder, just no longer in the list.