AxCrypt encrypts the locally stored One Drive file, then these files are synchronized / uploaded to One Drive. Encrypted.
One Drive just sees files. AxCrypt files. Word Files. Excel Files. PDF Files. Zip Files. etc.
This is also the almost essentially universal goal of AxCrypt use – to keep files *outside* of your computer, i.e. in the cloud etc, strongly encrypted and secured.
So, yes, the files will remain encrypted on One Drive. The other users accessing the files will need AxCrypt if you encrypt the files with AxCrypt.
What you might want to consider using if you just want files locally to be encrypted is BitLocker or similar drive encryption.