Word processors are applications for creating commonly used documents. A word processor differs from a fully fledged office suite because a word processor only is the program used to create common text documents while an office suite also contains programs for creating spreadsheets, drawings, presentations etc.
A word processor is not the same as an text editor either. A program such as joe or pico is used simply to edit text such as might be used in writing a computer program, or perhaps modify the configuration file for a program such as Apache.
Generally speaking, if you are able to bold text, or modify the way the text is presented on the page, and you can see the text become bold on your screen as you are doing this, you are using a word processor.