Can anyone enlighten me as to what exactly a gutter position is in Word? What
does it do/affect the format of a document?
In general publishing, a gutter is an extra amount of margin at the
binding edge of the page, to allow for the fact that most binding
methods don't allow the pages to lie flat when the book is open. The
left margin is measured from the gutter, not from the page edge.
Setting a gutter is also useful for printing pages that will be
punched for a three-ring binder or spiral or GBC binding, to make sure
the holes don't go into the text area.
Probably the best way to appreciate the effect is to watch the preview
picture in the File > Page Setup dialog as you change the settings.
First set the 'Gutter' measurement to a nonzero value (0.75 to 1 inch
is typical). The preview picture shows the gutter as a cross-hatched
area.
Now set the Multiple Pages dropdown to Mirror margins and notice how
the gutter is on the left for odd-numbered pages, and on the right for
even-numbered pages -- correct for when you print both sides of the
sheet and then bind them.