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Microsoft quietly released a free offline version of Office, but you're not going to like it
(www.xda-developers.com)
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I haven't seen this application yet, but is the difference that you can install word locally instead of using it in a web browser?
Yes, that's correct. You download an msi installer, install Office, and you have fully functioning Microsoft Office on your desktop without an internet connection. They say that they've removed the ability for you to save locally, but I can't see how that's possible so I highly doubt there's no fallback.
It's not a cloud solution.
You're right that it's not cloud-based, but it's still "always online" software. It's the same as a video game that doesn't function without the internet. I don't think you need to be such an ass about the distinction.
It's quite simple really: think of it as a "demo". You can be offline, start it, mess around, copy&paste stuff... close it and lose all your changes... or go online and save the file to OneDrive.
It is "not cloud" only in the sense that a cloud solution sends the code to run the app to your browser, which most likely will save it to local cache, then read it from there unless there is an update online.
Meanwhile, if you browse to draw.io, you can have your browser download the app to its cache, optionally "install locally" then go offline, open the app, load and save from local, go online, load and save from cloud... is that a "cloud" solution, or a "local" solution? What is a PWA?