Shared iCloud drive files are downloading instead of simply launching

The new iCloud drive file/folder sharing feature does not work as expected for me. I have used "Add People" to share both files and folders between multiple Apple IDs and those individuals are able to access the items using either the files app or via web interface (on Windows PC or on iMac). Everyone has permission to make changes. However, when attempting to open the files for editing, instead of just launching via the appropriate application (in my case, this is MS Excel), a COPY of the file is downloaded to the downloads folder. I want everyone with access to OPEN the native file so that collaboration can occur. Instead, the result I see is multiple copies of the file spread out over multiple users machines. Plus, after the first download, the OS starts adding a "-1", "-2", "-3", etc. extension to the filename so each succeeding download is unique. This is cloning, not sharing. Am I missing something in the setup or doing something wrong?