Kerning is the typesetting of two letters in a given font closer together than would otherwise be expected. It also refers to information embedded in the font which specifies which letters should be closer together or farther apart than usual. Kerning occurs when a particular pair of letters has a great deal of easily-removable whitespace between them due to their general shapes. Here's an example that occurs when placing a capital `W' next to a capital `A':
-- -- ^
\ / / \
\ /\ / /---\
\ / \ / / \
\/ \/ -- --
^
|
|
no kerning
-- -- ^
\ / / \
\ /\ / /---\
\ / \ / / \
\/ \/ -- --
^
|
|
with kerning
In general, kerning can greatly enhance the aesthetics of a given font's appearance and improve its readability. However, when rendering fonts with kerning information to a computer screen, a great deal of CPU power is wasted continually recomputing the kerning effects. Therefore, any WYSIAWYG document editor worth its salt should allow for disabling or enabling of real-time kerning. Somehow I doubt that Micros~1 WordTM fits that bill, though...