Ask students to choose the option Tools menu > Track Changes menu > Highlight Changes from the menu. They can now use highlighted text to add in comments and when attempting to delete original text, they will find it does not disappear, but is crossed out instead. Once highlight changes is activated, these two processes happen automatically. To switch off this Word function, un-tick the boxes in the highlight changes window.
When one student sends work to another, the second student can send an edited and commented version back to the authoring student for further review.