Greetings, that guy.

I haven't worked wiht Word 2010's new multi-authoring ability; someone else will have to speak to that. It allows multiple authors to work on a network-shared document simultaneously.

In 2007, the process with which I'm familiar involves the owner (editor) sending each person a copy of the document. Each person can either write a section, for example, or, with Track Changes on (Review/Track changes), make alterations and comments, and then return the document to the editor. The editor then uses Word's Compare and Combine (also in the Review tab of the ribbon) to combine the documents into a new one which will include all the entries and/or changes and comments.

Note that Review also includes a Protect Document section with Restrict Formatting and Editing. In this, the editor may choose to allow only track changes editing and comments, for instance, and then password-protect the document to prevent authors from changing other author's work.

More info in Help or web search.

Cordially,
Ulodesk