I doubt it would use the method you've described. It would, as you said, require MS Word to be installed, it would also be very resource intensive (because MS Word is) and would be very slow having to load up at least a portion of MS Word in order to implement this, most likely the entire program - anyone using a system a couple of years old will know that MS Word is a slow starter. Instead it would make much more sense to use a purpose-built dictionary/spell-checker library, the obvious choice being Aspell as electrik said.

Spelling mistakes, grammatical errors, and stupid comments are intentional.