I agree with fumei that it is not the size of the document that is causing a problem. I regularly work with documents that are around 1 Mb and have worked on ones that are really large (100 Mb and more).

The .docx format is much more robust than the .doc format. I would not do the editing with lots of changes in .doc format. If one of your authors is working in an earlier version of Word, when you are done with your editing, save in .doc format for that author. Besides, my understanding is that the markup utilities are better suited to multiple authors in the later versions. (I do not know this, just believe it.)

As for formatting putting a strain on processing... Direct formatting (not done through styles) puts all sorts of commands into every paragraph return. I know of no comparisons on demand. In part, it will depend on whether you have formatting changes as something that gets noted in track changes.

Part of the reason for the recommendation to view it in Final mode is that the demand may be on your video processor rather than your computer processor.