I need clarification on Xbox One online gaming, how does it work?

I recently bought a used Xbox One for my kids who want to play Overwatch and Minecraft. Now we currently have a Wii U system and they can play Minecraft online without anything other than our internet connection. We just recently bought the Minecraft game for the Xbox One and it tells us to use it online we must pay for XBOX Live Gold, why? The console is already hooked up to my internet connection so it's almost like XBOX wants to charge me to use my own internet connection. What type of software is in an XBOX One and why isn't my local internet connection good enough to play through with online gaming by itself? I feel like I'm being scammed. I don't need any of the other Gold benefits just want kids to be able to play online with other players through games like Minecraft and Overwatch. If I bought the PC Overwatch edition I wouldn't have to buy an extra paid subscription so why does XBOX make you do it?

I know, you need to pay the online subscription monthly to play online from consoles now. Should just play the PC version instead, all you need is internet connection.

Wii gaming is not interested in making more money from you. Microsnot Xbox gaming is interested in making more money from you. Just that simple.
Note, the fee system is only for multiplayer over the Internet. For local play, no payment needed.

Without sounding rude, it is apparent you don't really understand how it works.

Basically, Xbox Live is Microsoft's online gaming network. Ever since it came out nearly 16 years ago, MS has always charged for the service if you want to play online.

Right now MS is having a 'promotion' where you can subscribe for a year for $40 instead of the usual $60. If you don't want to pay for Xbox Live Gold (which is required for online play), then there really is no way to play online.

As for your last question, once you buy the game, there are no other fees other than DLC if your kids want to get that. However, make sure your PC is power enough for those games.

It's an online service you pay for. It's not a scam, it's to pay for the online service so they can keep it working properly. Normally, it's $60 a year. Sometimes they have promotions, or you can just do a month at a time. Though if you do the latter, make sure to take note of when to cancel it, as it may automatically renew, and charge you as well.

once you pay and signed into your Xbox Live account, also known as a gamertag, your kids can play online with players from around the world.

as Starrysky said, DLC - downloadable content - may cost extra from each game as well. You can create a parent account, or just put a password on it without them knowing, and control what they can purchase or not purchase. Some games may have micro transactions, where they can play real money to get in game content. There are also settings to turn that off or restrict it as well.

read those links for more info.

You are Not paying for internet usage with the Gold. You are paying for the service that Microsoft provides. This costs money to run, and you do get a fair amount for your money.

Ever since the Xbox 360, a Xbox Gold subscription ($60/year) has been required for online play. This money is to help pay for the network and servers that make up XBox Live. Incidentally, this is also why Xbox Live continues to be far more responsive and robust compared to Sony's PSN, or Nintendo's joke of a network.

Meanwhile, Nintendo is ALSO going to start charging for online play for the Switch within the next few months (I think their cost is $36/year.) If you want to talk about a ripoff, consider that Nintendo's network still lacks basic functionality that other game networks have had for nearly 20 years.