I just checked on my Mac laptop (curious what OS you are using, as it may make a difference for the developers), and yes... unfortunately, the undo function in Excel doesn't seem to work while using ArcGIS plugin app.
I'm not sure it's specifically related to the app, as I just checked it out when I saw your post and I'm not a member of the ArcGIS for Office team. However, I want confirm for you that it's not you, the bug exists for me too – even though I'm not sure what is causing it.
Thank you for posting this issue to the Esri Community, as I know our teams use the board to find and squash bugs! So hopefully it can be fixed in the near future if it is indeed related to the ArcGIS for Office app.
Ian
Good morning! Apologies for the delayed response here. We are beginning to phase out/retire ArcGIS for Office. There is a new Esri Community page for ArcGIS for Excel, here is the link!
As for the issue reported. I am not able to reproduce this. However, if you can provide additional details such as version, brief workflow, and what web browser you are using, I can check into this a bit further.
All the best,
Shannon