Edit attached/embedded Office files
In OneNote 2016 an attached Excel/Word file could be opened from OneNote, edited, saved, and synced automatically back to OneNote.
Now, in OneNote Windows 10, such files can only be opened as "Read Only."
This feature will be rolling out to all users on OneNote for Windows 10 over the next few weeks.
Don’t worry about saving the new changes as a separate file and re-attaching to your notebook – your changes are already synced and ready to be viewed in OneNote! Make sure AutoSave is on.
Here is the link to a recent blog explaining how it works
Actual link is https://techcommunity.microsoft.com/t5/Office-365-Blog/OneNote-March-2019/ba-p/388879 and scroll down to "Edit embedded files seamlessly"
The blog link doesn't work.
John W. Grefer commented
OneNote for Windows 10 has become useless for working with office files. Now you can only look at files that are added to a notebook.
I can't believe this isn't higher up.
I feel you, I started using the OneNote App, the first issue I've bumped too, was the files edit "Read Only" limitation. It bummed me out.