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, Li<sub>2</sub>MnO<sub>2</sub>F, we show that the oxygen redox process in such materials involves the formation of molecular O<sub>2</sub> trapped in the bulk structure of the charged cathode, which is reduced on discharge. The molecular O<sub>2</sub> is trapped rigidly within vacancy clusters and exhibits minimal mobility unlike free gaseous O<sub>2</sub>, making it more characteristic of a solid-like environment. The Mn redox process occurs between octahedral Mn<sup>3+</sup> and Mn<sup>4+</sup> with no evidence of tetrahedral Mn<sup>5+</sup> or Mn<sup>7+</sup>. 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.