Confused the hell out of me recently when I was looking for Office 365 on their website.
But in the world we seem to be heading toward, where you can only log into Windows with a Microsoft account, and where your Microsoft 365 subscription state controls which "edition" or "desktop experience" of Windows you get as said logged-in user (regardless of which machine you're logged into)... there'd be no need for Wordpad.
In that world, Word the software package would always be pre-installed. (Why? Because even if you aren't paying for M365, someone who is could always log into your PC as a roaming user; and that person would want Word to work immediately without having to wait for it to download+install.)
And in a world where Word the software package is always preinstalled, then Microsoft could just let anyone launch Word (whether they have an M365 subscription or not); and then, at launch, rather than just putting a paywall in the face of anyone without an M365 subscription, Word could instead use the logged-in user's M365 licensing state to determine whether the spun-up Word process should run the full-fat Word UI, or some kind of degraded unpaid-mode Word UI.
And "Word running with some kind of degraded unpaid-mode UI" could be every bit the "Word lite" offering that Wordpad is. Which makes Wordpad itself redundant.
(The only weird part to me, is that they deprecated/removed Wordpad before pulling the trigger on all of this.)