I think the issue is that it doesn't play well with Word's change tracker. But I could be wrong; my change tracker is diff(1).
If you have a completely plain vanilla document -- no formatting, no line breaks, no headers, no footers, no tables, nothing -- then OpenOffice/LibreOffice's tracking is good enough. But documents are rarely that simple. And, unfortunately, your lawyer or VC or potential acquirer really isn't interested in discussions about document formats. They have better things to do, and they expect you to be able to communicate with them.