The default File > Save experience in Microsoft 365 apps, like Word and Excel on Windows and Mac, is directed toward the cloud. This article is going to answer some of the common questions that administrators may have about this experience. For more information about how users will use this Save experience, please see: Save a file in Microsoft Office.
Does this feature overwrite the policies set by organizations?  
No, existing admin configurations and organizational policies will not be overwritten.
Do organizations have any control over this default save to the cloud?  
There are two group policy settings under User Configuration\Policies\Administrative Templates\Microsoft Office 2016\Miscellaneous that IT Admins can use to influence the cloud-focused save dialog.
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Hide File Locations When Opening or Saving Files - Users will see the old save dialog, instead of the new one, if this GPO is set to "Hide OneDrive Personal, SharePoint Online and OneDrive for Business."
If the GPO is set to "Hide OneDrive Personal" or "HideSharePoint Online and OneDrive for Business"then the new dialog will still be shown but the specified storage service will be hidden from it.
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Block Signing Into Office - Users will see the old save dialog, instead of the new one, if this GPO is set to "None Allowed"
Additionally there is a regkey that you can set that will set the Save to Computer by default checkbox, at which point your user will still get the new save dialog, but the default save location in the dialog will be whatever they have configured as their default local save location (probably their local documents folder).
This reg key is HKCU\Software\Microsoft\Office\16.0\Common\General\PreferCloudSaveLocations and you want to set the value to 0 to enable Save to Computer by default.
How can users change the default save location?
On Windows, end users can change their default save location for Office documents in the dialog by right clicking and choosing "Set As Default Location" on any of the recent locations.
On Mac, end users can change their default save location for Office documents by selecting Other in the Place drop down, selecting the folder they want to save to, and checking the box for Set As Default Save Location.
Can users quickly exit without saving?
In the old dialog box that popped up if a user went to exit an unsaved document, the user could press "n" to dismiss the dialog box and exit the program. With the cloud-focused dialog box, the user can get the same result by pressing ALT+N.
What happens if OneDrive storage is limited or file sizes are too large?
Any restrictions the user has in place remain in effect and the user can readily choose a different location to save their file.
Why is this default setting needed?
This save experience is an easy way to ensure files are saved and protected in the cloud at the time of file creation, especially if you aren't using OneDrive to sync your files yet. This then allows the user to take advantage of collaboration features like co-authoring without delay.
