A .txt file is a plain text file containing only unformatted characters like letters and numbers. By default in Windows, the operating system associates the .txt extension with Notepad because it is the simplest, built-in text editor designed specifically for viewing and editing such basic text files. Microsoft Word, while capable of opening .txt files, is a complex word processor primarily used for documents with rich formatting (like fonts, images, and layouts), which .txt files do not support. The system default aims to provide the most appropriate basic tool.

For instance, opening a simple notes file (.txt) containing only meeting points or reading a configuration file (.txt) for software is perfectly suited for Notepad due to its speed and minimal interface. Users typically open .txt files containing raw data, log files, or programming code snippets where the simplicity of Notepad avoids accidentally adding hidden formatting that specialized tools might misinterpret.

The key advantage of .txt files opening in Notepad is quick accessibility and speed for basic viewing/editing. Notepad uses minimal system resources. A limitation is that Notepad lacks advanced features like spell check or complex layout options. You can change the default program manually, but associating .txt with Notepad remains ideal for most scenarios involving purely unformatted text, ensuring efficiency and avoiding potential compatibility issues inherent in using rich text editors for plain data.