Most of these will only help with existing documents, but saving as the Word 2007 DOCX format will help with new documents.
Word 2007
Compress Images
- Click on an image
- Go to the Picture Tools "Format" ribbon
- Click "Compress Pictures"
There are then various options for deleting cropped areas, lowering the resolution etc.
Save as DOCX
The new DOCX format is much smaller as it's basically a ZIP file wrapper. Try renaming a .docx file to .zip to look inside if you're curious.
Remove Hidden Data
See this article from Microsoft Remove hidden data and personal information from Office documents
Word 2003
Compress Images
- Right-click on an image
- Click "Show Picture Toolbar"
- Click "Compress Pictures"
Remove Hidden Data
Download the Office 2003/XP Add-in: Remove Hidden Data - "With this add-in you can permanently remove hidden data and collaboration data, such as change tracking and comments, from Microsoft Word, Microsoft Excel, and Microsoft PowerPoint files."
Why do you want to optimize Word documents? You can just compress them after creation. It seems like there are much more significant space-saving techniques. – jtbandes – 2009-07-17T08:43:44.780