Hi Philip,

If 'Preserve Styles' is enabled, Word doesn't replace Styles that you have applied in the document. Thus Normal and Body Text Styles (the two most commonly used by those who don't know how to use Styles) will be left alone. If it is not enabled then Word will apply Styles according to the paragraph length, content, formatting, etc.

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Cheers,
Paul Edstein
[Fmr MS MVP - Word]