Hi Ian,
I'm a little late to your question, but this might still be good info to know!
We are a small municipality and use the O365 integration and web client with the Office Online Server specifically because we were looking for co-authoring and version control capabilities.
A few things that might be valuable for you to know (based on our experience and my own research):
- when doing co-authoring, microsoft's native versioning is capable of attributing changes to each user when they are editing in the same session, down to the line or word. In contrast, when using LF Web, the version changes are attributed to the user who is the last in the document and closes it (so if User A, User B, and User C are all editing at the same time but A and B leave, when C closes the document, all changes are attributed to C)
- comparing versions in LF is also a little different - bc of the SharePoint back end for Office Online applications in O365, you can compare versions in meaningful ways within all Office applications (see specific changes to the contents of a file in the corresponding office application with a track changes markup applied). In LF Web, you can do compare changes, but with the exception of Word Online (which will open the file markup version that you would see in Office Online if SharePoint were on the back end), version comparison in LF Web will not give you a breakdown of changes beyond saying that the electronic file has changed or that there were changes to the pages of the document.
These might be worthwhile differences for your client to know, we have found it to be impactful information for our users.