Even on Android there are much better equipped wordprocessors. I mean, WP 8.1. is from the same company, so you assume a serious word processor, would you?
As a Word power user and 30-year veteran of word processor wars, I really don't expect much of a word processor on my phone. Creating well-formatted docs on my phone would be akin to opening a vein.
I'm afraid this is one example of an app that devs have seen little value in competing with the built-in MS Office apps... The functionality is definitely geared more toward reviewing docs that were generated on a PC version of Word, although there are some basic templates provided for those moments when you're sitting at Starbucks and feel compelled to draft an outline.
I even worked with a Wang, which resembled with a system cabinet af big as a heater. I agree that typing with a keyboard is still the winner but typing with this phablet can be called rather pleasant. Nog fitted for novels or big reports, but writing short stories, blocs or articles could be more imaginable. Try TextMaker on an Android for Example.
Yeah, I used to work on a Wang too, and a few other dedicated Word Processors of the same era back in the 80s (I used to work with the binary file formats)
The Word Processor on Windows Phone is really geared up to be more of a review/simple edit kind of a tool rather than a fully featured authoring application. The code and UI involved in doing anything more complicated would be (in my opinion) unreasonably cluttered.