"A file format is the way in which information is stored in a file so that a program can open and save the file. A file's format is indicated by a three-letter extension after the file name. For example, when you save a new document in Microsoft Word 2000, Word by default stores it in Word 2000 format with a .doc file extension. If you want to convert a document to a different format so that you or someone else can open it in another program or in an earlier version of Word, you can select that file format when you save the document." Microsoft Word Help File

Extending your understanding: Open MSWord, Press F1 and enter the phrase "file format." Read - About file formats in Word 2000