In this screencast, Word program manager Zeyad Rajabi gives an introduction to “Compatibility Mode”.
Compatibility Mode ensures that documents created from older versions of Word will look the same in Word 2007 and that documents created in Word 2007 will look exactly the same when opened by legacy word users.
Zeyad Rajabi’s Compatibility Mode post
Microsoft Office Word team blog
Brian Jones' OpenXML Formats blog
MSDN Word Developer Portal
MSDN XML in Office Developer Portal