There are 2 ways to Undo a mistake: 1 is to use the keyboard shortcut Ctrl-z; the other is to go above the top Ribbon and find the arrows which indicate Undo and Redo. See the picture below and try out the arrows in the black oval - take them for a test drive and see what they can do for you.
The other nice thing in the new version is that you do not have to catch a mistake immediately after making it. Just keep hitting the arrow until you get back to where you need to be. Or alternatively, keep using the keyboard shortcut. Both work equally well.
Another Microsoft Word 2007 mystery solved!