At larger point sizes, it is esthetically pleasing to move some letters closer together than they would normally appear. For instance, the word "To". The letter "o" can be nudged under the arm of the "T":
Adjusting (increasing or decreasing) the space between adjoining type characters.
Two adjoining type characters to which a particular kearning value is applied.
The space between two adjoining type characters. This value is usually measured in em.
From the Word Help file:
Select the text you want to change.
On the Format menu, click Font, and then click the Character Spacing tab.
Do one of the following:
Expand or condense space evenly between all the selected characters
Click Expanded or Condensed in the Spacing box, and then specify how much space you want in the By box.
Kern characters that are above a particular point size
Select the Kerning for fonts check box, and then enter the point size in the Points and above box.
Note: Selecting Expanded or Condensed alters the spacing between all selected letters by the same amount. Kerning alters the spacing between particular pairs of letters.