I would assume that the previous free version is no longer supported - But I don't specifically know.
I do know that on a Tablet (not win device) or mobile you can obtain the office components if you have a 365 sub
https://support.microsoft.com/en-us/office/install-and-set-up-office-on-an-android-cafe9d6f-8b0c-4b03-b20a-12438a82a22d
To your first suggestion, you may be right (that they just stopped supporting a free version), and I was able to use the free Word Online for a long time before it mysteriously stopped working. But I haven't seen any notice about that anywhere in the ads
for it ("Don't use this free version because it's no longer supported"). And neither one of the two MS Tech support people with whom I've spoken have said that.
On your second idea, that I can always run the free version if I have a subscription to the paid version, that is , in fact, what the pop up is saying, that I must get the paid version before I can edit a document with the free version. That seems like an odd
thing to do on its face, and, again, none of the literature about it says that.
Thanks for trying, though.
Has anyone else but me ever had this problem?