What you may not know is how to choose a different format for that document, or why you'd want to.
By default, Microsoft Word uses its own, proprietary document format. In the old days, that was the Doc format, but as of Word 2007 (and continuing with Word 2010), it's Docx.
Other word processors have their own standards as well. OpenOffice Writer, for example, uses the OpenDocument, or ODF, format. Kingsoft Writer uses a format called WPS. And so on.
Fortunately, these and other programs can save documents in multiple formats, thereby making them easier to access in, well, other programs. That's why, in Microsoft Word, if you click the Save as type pull-down in the Save dialog, you'll see a wealth of choices. Below I've identified some of the more popular ones, and in what circumstances you might use them.
Rich Text Format RTF might best be described as a "universal word-processing format," as it's supported by just about every word processor. However, unlike plain text, it retains basic formatting information, like font sizes and styles.