Line spacing is the space between each line in a paragraph. Word allows you to customize the line spacing to be single spaced (one line high), double spaced (two lines high), or any other amount you want. The default spacing in Word is 1.08 lines, which is slightly larger than single spaced.
In the images below, you can compare different types of line spacing. From left to right, these images show default line spacing, single spacing, and double spacing.