Try not to think of it as a £200 laptop. If you want a £200 windows machine, you can find good refurb stuff at morgancomputers.
Treat a chromebook slightly differently
1) yes, you can store local files. Google docs and sheets will run locally. Google drive will sync locally all recent google docs and sheets. It will not sync Microsoft files stored in google drive. If you want to do anything properly, dont store and manage microsoft files. You can always convert to microsoft files if you need to send things out to somebody. You can also store any files on your SSD you like, saved from your email or downloaded from internet, or moved from USB stick.
2) Microsoft compatibility works very well now, except for some powerpoints that are badly put together, dont convert very well.
I would say 99% of the most commonly used excel functions are now supported in sheets
3) gmail is an excellent mail client, it will act as a POP3 client if you wish. It's miles easier to work with than outlook IMO, and the way it integrates with the other google environment is fantastic and saves loads of time (gdrive especially)
Here's a example:
Someone sends a Word file in an email to you
In gmail, you open the email. Hover over the attachment and in one click it is saved to your google drive.
Open the word doc in google docs and it will convert automatically, storing both the google docs and the original word doc on the google drive. AT this point I usually delete the word doc.
Do your editing.
If you need to send the file out to someone, you can email the google doc as an attachment from directly within google docs, telling it to attach it as a *.doc, *.pdf, *.rtf or a few others. It's really simple.
However, all of that is to miss the most powerful bits of the environment, such as sharing documents with other users. Or working online on the same document simultaneously.
I built my business using Excel, I know run my business 99% in google, working with colleagues in google, and sending and receiving materials in microsoft format from clients without any issues. We run video calls with the team whilst simultaneously editing work materials, all editing the same doc or sheet at the same time. It's fantastic.
Other things to mention, security. Chrome is encrypted, all of it. It also wont run unless it has an unmolested, signed version of chrome. It cant run a virus (I suppose I should say "yet," but really it is a hostile environment for OS viruses).
I have 2 chromebooks, so Mrs S and I can use them at the same time, but it also means that if one dies, I can grab the other and in <10seconds be back up and running, in exaclty the same workspace with no (important) files lost (local file copies will be lost, but since all google materials sync, they are not lost)
The whole environment works and syncs seamlessly with android too, so I have access to all my materials on my phone or tablet, or on anyone elses computer with an internet connection. I know aim to have absolutlely no information anywhere but inside my google account so I dont have to think about hardware at all.