It's important to understand that, unlike Google Apps, O365 isn't a true cloud offering in that it uses viewers connected to hosted documents (web apps) rather than hosted document creation software. You can only create new documents if you supply a template that the web app can use and add a content type to a library, neither of which is an intuitive process - or anywhere near as straightforward as document creation in Google. And then the editing facilities are severely limited.
You can access the appropriate web app by clicking a document - provided you set up your site to "open in the browser".
To sidestep the document creation issues, I developed a web part that will let you create any type of Office document on any site. You can download it by selecting "Adding a 'Create New Office Documents' web part - with icons." on this page.