"Word" is the shortened form of the phrase: "my word is my bond" which was originated by inmates in U.S. prisons. The longer phrase was shortened to "word is bond" before becoming "word," which is most commonly used. It basically means "truth." Or "to speak the truth."
"Yo, I fucked twelve bitches last night."
"Word?" ("You speak the truth?")
"Word." ("I speak the truth.")