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LibreOffice is pretty damn good
(lemmy.ca)
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Yes yes. The issue here being that in the real world nobody much is doing the latter. But we're getting off topic, LibreOffice is neither.
LibreOffice can perfectly work with files stored on other people's computers.
Yes, in theory, although tricky to set up. What it cannot do, at least not without fiddly modules, and even then nowhere near as well as the cloud competition, is any kind of collaborative document editing. Which is where the world is at today.
You said "in the real world nobody much is doing the latter".
Indeed, confusing terminology. I consider that collaborative document editing is the activity, cloud hosting vs P2P is the technical implementation.
Like it or not, nobody much is doing the latter because it's much harder to set up and the available cloud solutions provide a much (much) better user experience. I don't say this a better situation but it's the way things are.