Look up Word Object Model. Not all of that applies to Word 97, but that is the basic structure.

Word works like a Russian doll with containers boxed inside other containers.
The overall container is the application.
The document resides inside that when open as a part of the documents collection.
Sections reside inside the document. There is always at least one.
The body of a document, Headers and Footers, Footnotes are parts inside a section.
Paragraphs are inside each of those.
Words are inside paragraphs as are characters and also Textboxes.

Styles are containers of formatting that can apply to text. In Word 97 they applied to characters or paragraphs.

By using direct formatting instead of styles you are adding a lot of complexity to a document. Usually, this complexity is not needed; it makes editing difficult.

These concepts are discussed as far as styles are concerned here: Importance of Styles in Word

Quote:

You will save yourself, and others, untold hours of hair-tearing. For shorter one-use documents, direct formatting is OK; you'll only regret not using styles about one time in six, on the other five out of the six, you'll save a bit of time. If you create document templates with direct formatting, you deserve what will happen to you when someone finds out (and it won't be nice). In my opinion, using direct formatting in document templates intended for use by others rates the words malicious and/or incompetent. If the templates are for your own use, you deserve the loss of days, months, even years from your life that you'll spend fighting with Word and trying to figure out why your documents look so bad. Trying to use Word without understanding and using styles is like pushing on a string. I resisted learning and using styles for years and now regret every day of those years because although that string was still very hard to push, it kept getting longer and longer, and had some very important projects tied to it! Once you understand styles and the Word concept of organizing things into Chinese boxes everything falls into place and instead of pushing a string, you can push a button that turns on the very powerful text processing machine known as Microsoft Word and it will start doing your work for you instead of running around behind you trying to undo what you thought you just did.