You have to find a reasonable compromise between readability and making all changes transparent. Therefore, I would advise against using the track changes function in MS Word exclusively to present your revisions. You would primarily reduce readability to an unacceptable extent.
Usually, it is fine to explain in the letter that accompanies your revision which parts you removed without making this transparent in too much detail in your revised version. In my experience, this works very well. Especially of you basically rewrite/shorten large sections, it is enough to write something like "section XY was rewritten in order to stay below the limit of Z pages, as requested by the editor". Then you can highlight the new/revised text, and you are fine.
In some cases, journals also allow to upload a specific version only used for review that includes highlighting of the changes, in addition to a non-highlighted version. In such cases, it might be appropriate strike out parts of the text or even use the track changes function because the fully readable version is also available to the reviewers.