You may be interested in the following.
Microsoft Learn – Word "reduced functionality mode"?
Microsoft Support – Update Microsoft 365 or Office on your macOS or iOS device
If I understand the second article correctly, it should be possible for you to download an update to Office 2021 that will fix the problem – for now.
If you were having the problem with Office 2019, you would be hosed. If you were having the problem with Office 2021 and could not update your Mac past Monterey, you would also be hosed. But according to your tag line, you have a M3-series MacBook Pro released in 2023. That implies that you're running something later than Monterey (those MBPs shipped with Ventura and can't run anything earlier). Which implies that you should be able to grab the Office 2021 update to fix the problem (if – and this might be a big if - Microsoft's support article is accurate).