That is a good point, MittensPS. Microsoft does not make this easy. Or at the very least, it's confusing.
For Office 2016 and 2019, you activate the software using the standard Product Key method that's been used for years. Which looks something like this (the X's being a mix of numbers and letters).

For Office 365, you use the email address and password you used to set up your MS online account and follow these instructions. You don't have to specifically follow step one. Launch any Office app however you want. It also doesn't matter which one. Once you sign in, they're all activated. If you don't have an MS account yet, you create it in order to have a sign in activation. You must use the same email address the purchase confirmation went to.
Office 365 from the App Store is different yet again. You purchase Word, Excel or PowerPoint and with a subscription. Once paid, all three of those are active. If you want Outlook, you acquire it as an extra in-app purchase. Essentially, the same idea as buying Office 365 directly from MS as the Home and Student version without Outlook, and the more expensive Business version with.
And just to add to the confusion, while you can't use Office 365 downloads directly from MS if you purchased it through the App Store, MS allows you to use the App Store downloads if you purchased Office 365 directly from MS. This per a quote from a recent Apple Developer's Conference:
The Office 365 apps are available from the Mac App Store with a free one-month trial. The full Office 365 bundle includes six apps: Excel, PowerPoint, OneDrive, OneNote, Outlook, and Word, though you can download individual apps. Once the free trial is over, the subscription price for the six-app bundle is $69.99. If you already have an Office 365 subscription, you can use it.