You must complete several steps to format a book for publication in MS Word. Steps include selecting the correct paper size and setting the margins, using styles, use sections, creating headers and footers, and depending on the style of book, you generating a table of contents, index, or bibliography.
Besides these basic steps, each publisher has slightly different rules, and an eBook is a bit different too. Let's take these steps apart one by one, in order of what I consider the most important.
Styles are mandatory for book formatting for many reasons. Firstly, styles make it possible to keep your book's formatting consistent. It is just not possible to keep a document over about ten pages consistently formatted without styles. Secondly, without proper use of styles, you cannot automatically generate a table of contents or index. Also, if you want to convert your book into a kindle eBook via InDesign (the only non-hand coding method to do so), you need to have styles in your Word document to successfully get a kindle table of contents.
So, don't bold, italicize, or change the font or color of a word or phrase. Just don't. If you've already done this in your book, I recommend selecting the whole document (Control A) and clearing all the formatting. (From the Home tab in the ribbon, click on the little pop out button on the bottom right side of the styles section. Clear all should show up at the top of the list, just above normal.)
Manually bolding, italicizing, or changing fonts is bad. It is a last resort. Don't do it unless you can justify it, and about the only time it is justifiable is if your document is two pages long or less, so if you're writing a book, don't do it.
Instead, use styles. If you don't like something about a style (the color, font size, font, or something else), change the style. Don't manually override the text. To change the style, go to the Home tab in the ribbon and scroll through the styles until you find the style you want to change. Right click on the style name and select Modify. Change the font and hit save. The text will change to match the new formatting for all instances of that style.
A book needs several sections. While you can do a book in one section, that will force you to use the same header and footer throughout the book. At a minimum, you should have three sections.
The first section will include the cover page, any preferences or pages that you want to number with small letters, and the table of contents.
The middle section will include the bulk of your document, including all your chapters.
The last section of the book is for the index, bibliography, about the author, and other things you might like at the end of the book.
Create headers and footers.
Create your headers and footers. Go to the Insert tab on the ribbon and select Header or Footer from the Header and Footer section (which is to the right of Links and to the left of Text). Chose a header style and insert it. The document will go into Print Layout view and your mouse will be in the header.
Stop here for a minute. Before you modify the headers, go to the first page of your second section (or middle section.) While in the Header and Footer Design tab go to the Navigation section. Un-click "Link to Previous." What this does is makes it so the headers of the first and section sections can be different. Repeat this procedure for the third section. Then, go to the first section, the section that houses your title page and table of contents, and select Different First Page in the Options section of the Header and Footer Design tab.
Stop again. Go back and repeat all those steps (unlink to the prior section and different first page for the first section) for the footer.
Select the correct paper size.
Go to the Page Layout tab in the ribbon. In the Page Setup section (just to the right of Themes), click on the pull out button at the bottom right of the screen. In the Page Setup dialog box that comes up, click the Paper tab. Choose the type of paper you want.
Generate a table of contents.
Put your cursor in the first section where you want your table of contents to go. Select Table of Contents from the References tab. Choose a style and insert it. If your table of contents is more than one page long, update it at some point so the page numbers are refreshed. If your table of contents is more than one page, consider including less levels of headings to make it smaller.
Create an index.
Go through your document and mark all the phrases that need to show up in the index. To do this, select the item to mark and go to the References tab in the ribbon. In the fifth section, Index, click on Mark Entry. Marking the entry might change Word into a mode where all characters are shown. If you want to turn this off when done marking entries, go to the Home tab in the ribbon and click on the little paragraph mark. Once all your entries are marked, insert your index. Go to the Index section under the References tab in the ribbon and click on Insert Index.
Create a bibliography.
Select the style of bibliography. Go to the References tab in the ribbon. The third section is Citations & Bibliography. In this section, choose the appropriate style. (I like The Chicago Manual of Style the best, but the other common choice is APA, although the sixth edition is much better than the fifth.)
Click on Manage Sources. Create an entry for each book, journal article, web page, or interview. Create an entry for anything that should be included in your bibliography. Then, make sure all the entries are on the right side of the citation manager so they show up in the current list. Close the citation manager dialog box when done.
Insert the bibliography. Click on the Bibliography drop down in the Citations and Bibliography section. Choose a format and click on it.
Compare your document to the specific rules of your publisher.
All publishers have slightly different rules, so compare what you have done with the rules set by your publisher.