There are few examples where Apple software can be said to be in inferior to Microsoft products but it has to be said, Microsoft Word still has the edge on Pages.
However, that gap is getting smaller and smaller and Pages is a fantastic word processing application that slowly winning hearts. Although it can take some getting used to if you've used Word all your life, once you get the grip of it it is easy to use, relatively inexpensive (it comes as part of iWork which includes among other things, the excellent Keynote presentation software) and as expected from an Apple product, the graphic design features are second to none.
Unfortunately, Pages still lacks basics such as a grammar checker although the truth is that the grammar checker in Word is rarely useful anyway only offering subtle changes that don't really make much difference to the meaning of a phrase or sentence. Where it certainly excels over Word is for graphics - many users prefer it for designing posters, adding tables and just about anything where graphics are concerned.
It may not quite be up to MS Word but Pages is slowly getting there and future releases will surely see it address the few issues that remain to make it a truly great word processor.