Google Docs are word processing files. Using Docs, though brings a new twist - you can share the document with other people and allow them to edit the document along with you, the owner of the document.
If there is a final version of the document, sharing permissions can be changed so that no more edits can be made. Documents can be downloaded in a variety of formats, .pdf is a popular file download.
For a quick start guide to Docs and a great explanation for "Switching to Docs from Microsoft Word" click on this link from the experts!