Inspired by this question and its answer, the following identity can be found there which is verifiable :
$$\begin{align*}7^{7^{n+1}} + 1 \;= &\;\;(7^{7^n}+1)\\
&\times\left[(7^{3\cdot7^n} + 3\cdot 7^{2\cdot7^n} + 3\cdot 7^{7^n} + 1)+(7^{(5\cdot7^n+1)/2} + 7^{(3\cdot7^n+1)/2} + 7^{(7^n+1)/2})\right]\\
&\times\left[(7^{3\cdot7^n} + 3\cdot 7^{2\cdot7^n} + 3\cdot 7^{7^n} + 1)-(7^{(5\cdot7^n+1)/2} + 7^{(3\cdot7^n+1)/2} + 7^{(7^n+1)/2})\right],\end{align*}$$
which instantly shows that $\frac{7^{7^{n+1}}+1}{7^{7^n}+1}$ has two factors. One sees that the second factor is the smaller one, and is greater than $1$ for all $n\geq 1$ by comparing appropriate terms of the addend bracket and subtrahend bracket.
Thus, for $n=2023$ the given quantity is composite.
This kind of factorization arises from the more general identity
\begin{align}
7^{14k+7} + 1 &= (7^{2k+1}+1)\\
&\times (7^{6k+3} + 3\cdot 7^{4k+2} + 3\cdot 7^{2k+1} + 1) \\
& \times (7^{5k + 3} + 7^{3k+2} + 7^{k+1}).
\end{align}
To see how that identity is derived, one needs to note that the identity above belongs to a special class of factorization identities known as Aurifeuillian factorizations. To spot our factorization, one needs to look at the case $b=7$ in the page provided.
Expanding further on these kinds of factorizations requires us to define the cyclotomic polynomial $$
\Phi_n(x) = \prod_{k=1,\gcd(k,n)=1}^n (x-e^{\frac{2\pi i k}{n}}),
$$
For example, if $p$ is a prime, then a standard manipulation yields that $$\Phi_p(x) = 1+x+\ldots+x^{p-1}.$$
In your case, what might be more important to observe is that if $n = 2p$ where $p$ is a prime, then $$
\Phi_p(x) = 1-x+x^2-x^3+\ldots + x^{p-1}.
$$
Match this to the expression you got when $p=7$. The polynomial $x^6-x^5+x^4-x^3+x^2-x+1$ is nothing but $\Phi_{14}(x)$. If you need help spotting cyclotomic polynomials, at least some cases may be possible to spot, as suggested here.
Aurifeuillian factorizations begin with the observation that you're factorizing a number of the form $\Phi_{n}(k)$ where $n,k$ is an integer. As you can see, the number you're trying to factorize is precisely of that form, where $n = 14$ and $k = 7^{7^{2023}}$.
Once this is done, then one can look at Schinzel's landmark paper.
Schinzel, Andrzej, On primitive prime factors of (a^ n -b^ n), Proc. Camb. Philos. Soc. 58, 555-562 (1962). ZBL0114.02605.
I won't state Schinzel's main result in his language, but instead defer to the following article :
Granville, Andrew; Pleasants, Peter, Aurifeuillian factorization, Math. Comput. 75, No. 253, 497-508 (2006). ZBL1107.11050.
which gives the following statement :
Suppose that $n$ is a composite number not divisible by $8$ and let $N$ be the largest odd factor of $n$ (note that $n=N,2N,4N$ are the only possibilities now). Suppose that $d$ is any squarefree divisor of $N$ (which can be negative if $n=4N$). There exist polynomials $U_{n,d},V_{n,d}$ with integer coefficients such that $$
\Phi_N(x) = U_{N,d}(x)^2 - d(-1)^{(d-1)/2}xV_{N,d}(x)^2, \\
\Phi_{2N}(x) = U_{2N,d}(x)^2 + d(-1)^{(d-1)/2}xV_{2N,d}(x)^2, \\
\Phi_{4N}(x) = U_{4N,d}(x)^2 -2dxV_{4N,d}(x)^2.
$$
Let's try this with the illustrative example given by the same paper. Suppose that you take $x = ay^2$ where $a = d(-1)^{(d-1)/2}$ in the first example above. Then, you get :$$
\Phi_N(x) = U_{N,d}(ay^2)^2 - d(-1)^{(d-1)/2}(ay^2)V_{N,d}(ay^2)^2 \\
= (U_{N,d}(ay^2))^2 - (ad(-1)^{(d-1)/2}yV_{N,d}(ay^2))^2 \\
= (U_{N,d}(ay^2) + ad(-1)^{(d-1)/2}yV_{N,d}(ay^2)) \times (U_{N,d}(ay^2) - ad(-1)^{(d-1)/2}yV_{N,d}(ay^2)).
$$
From a cursory reading it is not clear if the polynomials can be constructed using the proof or not. Nevertheless, the Wikipedia page on Aurifeuillian factorizations is a decent enough start for any olympiad type problems.
Some degree comparison constraints will tell you that for large enough values of $a,y$, the above factors are both greater than $1$. In other words, $\Phi_N(ay^2)$ is composite for all choices of $y$ and $a = d(-1)^{(d-1)/2}$ where $d$ is any square-free factor of $N$, as long as $n$ is large enough (I am not sure if the factorization is nontrivial for all $n \geq 1$).
Similar results show that $\Phi_{2N}(d(-1)^{\frac{d+1}{2}}y^2)$ and $\Phi_{2N}(2d)$ are also composite for large enough $N$, where $d$ is any square free factor of $N$ and $y$ is arbitrary.
Thus, we obtain a larger class of numbers that can be shown to be composite using the abstract method of Schinzel. This includes the number in question, which is $\Phi_{14}(7^{7^{2023}})$ using the decomposition $$
\Phi_{14}(7^{7^{2023}}) = \Phi_{2 \times 7} \left(7 \times (-1)^{(7+1)/2} \times \left(7^{\frac{7^{2023}-1}{2}}\right)^2\right)
$$
and matching this up with the decomposition I gave earlier.