There seems to be an issue with version 1706 (build 8229.2086) which causes lagging/slow typing on certain types of documents with images/templates.
As a temporary workaround, roll back to an earlier version of O365 office:
Disable office updates:
In word->File->Account
Check your version of Word
Switch off automatic updates.
To roll back to an earlier version:
Open an elevated command prompt and run the following commands:
cd %programfiles%\Common Files\Microsoft Shared\ClickToRun
officec2rclient.exe /update user updatetoversion=16.0.xxxx.yyyy
Where xxxx.yyyy is soemthing like 8201.2075 (seem to fix the issue)
Remember to tuen updates back on at a future point and restore Office to the latest version once the issue has been resolved.