Office Online Server is an on-premises installation and does not require a connection to Office 365 or any Office 365 licenses.
Office Online Server (known as Office Web Apps), is a server that allows users to view and edit Office documents, such as Word, Excel, PowerPoint, ,OneNote, and PDF , using Internet Explorer browser.
Office Online Server can add features through Exchange Server 2013 or 2016, as well as Skype for Business Server 2015 or Lync Server 2013.
From SharePoint, you can create Word, Excel, PowerPoint, and OneNote documents directly in the browser instead of using Office Client installed on the user machine. This functionality eliminates the need to install Office on the client computer.
Office Online Server also allows you to preview Office documents that are returned by SharePoint Search and on a document library view just by hovering the document title.
One of the significant advantages is that you allow your users to edit their document without being tied to a computer that has Office installed.
Another advantage is the ability to collaborate with people in multiple locations, regardless of what Office version and the computer platform they are using.
Office Online Server also enables a feature called “Durable Links” which allows you to move or rename documents in the same site collection without the link referencing to that document breaking.
this server needs a dedicated VM and cannot be installed on exiting SharePoint server. you can have one or more Office Online servers, the number of servers depends on the number of users, and the type of functionality were editing requires more resources than viewing a document.
MS recommendation for 200,000 users 10 servers which mean that one server can handle 10,000 to 20,000 users.
you can access the Office online server farm through two URL’s one is the internal and the other is the external URL.
Security is handle by Oauth using SSL protocol.