The alignment of text in a novel is fully justified, meaning the left and right margins are flush (even). The software achieves this by stretching out the spaces between words to a greater or lesser extent. Professional layout software also adjusts letter spacing (to a less obvious extent), which Word doesn't do.
The longer the words you use, and the larger the font (i.e. the shorter the line length), the more likely it is you'll get ugly spaces between words. In the sample below (I've increased font size to emphasize the problem), the first paragraph looks fine, but the words in the second paragraph are widely spaced because the word "important" didn't fit on the previous line:
Professional typesetting software would hyphenate the word "important", to put a few letters on the previous line thus making the word spacing smaller. Your ebook device probably does the same thing. Word has the same capability but it's not switched on by default. To enable automatic hyphenation, go to Layout > Hyphenation > Automatic:
This creates hyphens throughout your entire document, so use the feature with care. Automatic hyphenation is often too... aggressive. Word can do unsightly and sometimes ridiculous things once given the go-ahead to break up words willy-nilly. For example, the word "nature" isn't what I'd consider a long word, but here Word broke it across two lines:
Frankly, I'm annoyed by that. (The word break itself is "correct", meaning the hyphen is in the right place if you want to break the word. You wouldn't break it nat-ure, because it misleads the reader on pronunciation. That is, if they were reading the piece out loud, they may say "natt" and have to correct themselves when they reach the next line.)
Over-hyphenation also increases the likelihood of "stacked hyphens" (consecutive hyphenated lines) which were a big no-no when I worked in publishing:
When two letters only are split off a word, I don't see why any hyphen was necessary.
If you see unsightly or illogical things happening, you can turn off hyphenation for a single paragraph to override the hyphenation command: right-click within the paragraph and go to Paragraph > Line and Page Breaks > Don't Hyphenate.
Your other option is to not use automatic hyphenation, and go through your book when all other formatting is complete to search for obvious problems and fix them one by one by adding a manual hyphen. Be aware that if, at a later point, you adjust line length or font size, that manual hyph-en could end up sitting in the middle of the word, as in the sentence you just read.
There are editing "rules" for where to break a word with a hyphen. Most obviously, never break a one-syllable word, even a long one like through. A good dictionary shows where to break words by separating the head word with dots. Note the break isn't necessarily between syllables, as with this word:
Here's a good article with advice on word breaks from copyediting.com.
Was all that nitty-gritty enough for you? Do you use professional software or are you stuck using Word workarounds?
Nitty-Gritty Formatting for Your Indie Print Book - intro
Hard and Soft Section Breaks
Font Sizes Part 1
Font Sizes Part 2
Body Text Font Choices
Making Word Do What You Want Part 1
Making Word Do What You Want Part 2