Love it or hate it, Overtype mode was easy to use and it didn’t take long for people to catch on. By default, Word’s in insert or normal mode. That means that what you type pushes text to the right (or left, depending on your language setting). Overtype mode let you replace existing text. Simply press [Insert] to enable Overtype mode and start typing.
If you suddenly start replacing text, a quick glance at the Status bar reveals what’s wrong—the OVR indicator is turned on because you pressed [Insert] when you (probably) hadn’t meant to. You see, in earlier versions, you press [Insert] to toggle Overtype mode. It’s easy to use when you need it — that’s why people love it. It’s also easy to inadvertently enable it — that’s why people hate it.
That’s all changed in Word 2007. By default, the [Insert] key does not toggle Overtype mode. That change is probably confusing to people who are use to that routine. You can still use [Insert], but you have to flag a setting, as follows:

  1. Click the Office button.
  2. Click the Word Options button.
  3. Choose Advanced in the left pane.
  4. In the Editing Options section, check the Use The Insert Key To Control Overtype Mode option.
  5. Click OK.

If you want to work in Overtype mode solely, check the Use Overtype Mode (step 4). I’m still uncertain as to why Word uses this particular hierarchy. Usually, a sub option is available only if the main option is checked, but not so with these two.
Perhaps it’s best to just forget the old ways. Don’t even bother with [Insert]. Instead, right-click the Status bar and check Overtype. Doing so displays the Overtype/Insert indicator. Then, simply click the indicator to switch between the two modes. It’s definitely a change for the better… if you can find it!