In the search for high energy density cathodes for next-generation lithium-ion batteries, the disordered rocksalt oxyfluorides are receiving significant attention due to their high capacity and lower voltage hysteresis compared with ordered Li-rich layered compounds. However, a deep understanding of these phenomena and their redox chemistry remains incomplete. Using the archetypal oxyfluoride, Li2MnO2F, we show that the oxygen redox process in such materials involves the formation of molecular O2 trapped in the bulk structure of the charged cathode, which is reduced on discharge. The molecular O2 is trapped rigidly within vacancy clusters and exhibits minimal mobility unlike free gaseous O2, making it more characteristic of a solid-like environment. The Mn redox process occurs between octahedral Mn3+ and Mn4+ with no evidence of tetrahedral Mn5+ or Mn7+. We furthermore derive the relationship between local coordination environment and redox potential; this gives rise to the observed overlap in Mn and O redox couples and reveals that the onset potential of oxide ion oxidation is determined by the degree of ionicity around oxygen, which extends models based on linear Li-O-Li configurations. This study advances our fundamental understanding of redox mechanisms in disordered rocksalt oxyfluorides, highlighting their promise as high capacity cathodes.