This policy setting only applies to subscription versions of Office, such as Microsoft 365 Apps for enterprise, and to subscription versions of Project and Visio.
This policy setting controls when Office files are scanned at runtime by an installed Anti-Virus software.
Note, files will only be scanned if the Anti-Virus software registers as a provider for runtime scanning.
If you enable this policy setting, Office applications will submit all files for a runtime scan by Antivirus.
If you disable or do not configure this policy setting, Office will selectively submit certain files, for example encrypted files, for a runtime scan by Antivirus.