The point size of the font is vertical height of a stripe across your page
that completely encloses the characters -- ie, the distance from the top of
the highest ascender to the bottom of the lowest descender. (In the days of
metal typesetting, it was the vertical height of the slug face.)
For 'standard' typefaces it is usual to add about 20 percent for leading (ie
spacing between the lines) -- so the baselines of 10pt characters will
typically be 12pt apart. Word's 'single' line spacing automatically adds
some leading, depending on the font.
In classic typography the amount of leading should be partly a function of
line length: the longer your lines, the more vertical separation they should
have (the longer the line, the harder it is for the reader to go from the
end of one line to the start of the next). So a document that looks OK 10 on
12 in portait mode might need to be 10 on 14 in landscape.
It also depends on the face itself. Faces with a large X-height relative to
total height (some faces designed for screen legibility have X-heights over
50 percent) tend to need extra leading or they looked cramped.
