Hello mrmyth,
Thanks for your post here.
I would like to confirm if you want to open or create Office documents in your SharePoint Online with Office Web Apps, not with Office applications in local.
If so, you can refer to the following steps:
1.Make sure you have the Office Web Apps license.
•Login to Office 365 Portal, and click Users in the left pane of Admin page.
•Click on your username, and in the Assign Licenses page, and make sure the Office Web Apps is selected.
2.Make sure Office Web Apps is active, and Open Documents in Client Applications by Default is not activated, just as the screenshot below.
•Login to your SharePoint Online, click Site Actions, Site Settings.
•Click Site collection features under Site Collection Administration. Or click Go to top level site settings to find that.
3.Make sure Open in the browser is selected under Default open behavior for browser-enabled documents.
•Locate the document library, and click Library Settings under Library tab.
•Click Advanced settings, and select Open in the browser under Default open behavior for browser-enabled documents.
•Click OK.
4.When you want to open a document in SharePoint Online, put the cursor on the file name, and click the down arrow, and then you can choose to click View in Browser or Edit in Browser.
Thanks,
Cherry Wang