A practical example of this is the Tic Tac Toe computer made out of Tinker Toys at the Boston Science Museum (originally made by a team of MIT students). Of course, this is much simpler than Microsoft Word.
Here is a 1989 article from Scientific American describing it.
There have also been Turing machines made out of legos (this cheats a bit because it uses electricity---indeed a computer---for movement, but I think the design could be modified to avoid this) scrap metal, and more.