The use-case of an attached keyboard and the fully fledged Office app suite is not what this device is primarly for.
That may be true, but it's a poor excuse. The basic function of a word processor is to easily generate formatted text, historically primarily for printing on letter-type paper, but that's maybe a bit less important today than it once was. Minimal functionality for a word processor is being able to render that text as fast as a human user can type it.
WYSIWYG word processors had this capability well over 20 years ago on CPUs far inferior to a quad-core Cortex A9 with a thousand times less RAM. For a major software company to fail at this in 2012 is inexcusable. If Tesla's new sedan had a top speed of 50 MPH, prospective buyers would say it's not ready no matter how cool its other characteristics are.
Of course, it is a preview edition of Word. Maybe the finished version will have acceptable performance. Until then, "it isn't done" is the only reasonable conclusion. Regardless of any other features, Microsoft has not provided the minimum viable product for a word processor.
 Note: not hyperbole. Two megabytes versus two gigabytes.
If anything, you were generous. You could run WYSIWYG word processors on a 512KB Amiga or Atari. Both with a single M68k CPU at <8MHz. Interestingly they were on the market at pretty much the same time as the secpnd generation ARM CPU's used in the Acorn Archimedes range, and while there were numerous discussions about which were faster, a 7MHz-8MHz M68k is at least in the same magnitude performance wise as an 8MHz ARM2 CPU..
(EDIT: Actually, there was at least one WYSIWYG word processor for the Commodore 64 too - GeoWrite)
Factoring in improvements in architecture on top of clockspeed increases we're probably talking at least a thousand times more performance per core for a Cortex A9 vs ARM2. And that's likely generous towards these old machines too...
(can you tell I'm frustrated that my phone and tablets (Android; not bashing MS for this) are more sluggish than my 1988 Amiga 500+)
I spent last night hacking on FrexxEd (Amiga editor; one of the authors went on to write CURL) and ACE Basic...
Heck, back in 1972, I was running, and writing, page layout software on machines with almost a million times less RAM than my current MBP. (16K 18-bit words vs. 16GB). And the editor had no trouble keeping up with typing, which was limited more by the 10 cps limit of the Teletype than anything else.
Back in the early 1970s Xerox PARC created a WYSIWYG text editor called Bravo. It ran on the Alto which had a maximum of 128K of memory. Approximately 3/4 of that memory was consumed just to store the bitmapped screen, so Bravo would have had to run in about 32K.
As a side note, Charles Simonyi (of Microsoft Office fame) worked for PARC at the time. I might be misremembering, but I think he had some involvement in Bravo.