This is a new feature added to MS Word 2007:

This feature gives you following functions while pasting into MS Word 2007:

1. Adjust sentence and word spacing automatically
2. Adjust paragraph spacing  on paste
3. Adjust table formatting and alignment on paste
4. Smart style behavior
5. Merge formatting when pasting from MS office PowerPoint
6. Adjust formatting when pasting from MS Excel
7. Merge pasted lists with surrounding lists

To activate this feature go to :

1. Open Ms Word and click on Office button then click Word Options
2. Click Advanced
3. Under heading Cut, Copy,and  Paste, Set the Use Smart Cut and Paste check box as desired