The problem is Files is not a complete implementation of Finder and several things are missing or very limited. The Launch Services database is among the very limited. So limited in fact that only Apple app's files are correctly associated with the appropriate app. So in Files you can click on a Numbers file on iCloud and it will dutifully open in Numbers. Click on files from non-Apple app and Files doesn't know what app to open.
You can open files from within an app without using Files. As an example, by default Numbers only looks at the files in the Numbers folder, however if you click on "browse" at the bottom of the window you can browse freely through all the files on the iCloud Drive to find and open any particular Numbers (or Excel) file you are looking for.
As I don't have Excel on either my Mac or iPad I have no way to test my assumption, but I would assume Excel would work the same way as Numbers.
