Because when you design something, you design for different priorities, implicit or explicit.
.doc was supported / co-existed with .rtf and .txt at the beginning of Word.
Designing for interoperability, .txt and .rtf were good enough. Mac as the other major OS had an MS Office suite. Interoperability/importing WordPerfect was important.
Designing for backwards compatibility was a necessary for Microsoft supporting different OSs and legacy personal and business.
Designing for file size was very important. Most people that use Word don't use styles, so your HTML will be filled with inline CSS (and that didn't exist at the time), and filesize would definitely be impacted.
Designing for the page was important. Word was about printed / print-like documents. HTML struggles to do today what Word and other word processors have done for decades and continue to iterate on.
Designing for user experience really catapulted Word above competition. I used and liked WordPerfect but it was a blue screen DOS application. When I saw Word, I had WYSIWYG! And I had copy-paste. There was a time when copy-paste was a new thing for many users not in the *NIX/OS2/Amiga/Atari/BoOS world. (A year later I discovered Unix, and that's key also: design for discoverable features and platforms.)
So, what are you designing for? Figure that out, then pick your implementation method.