Text wrapping is basically just a choice between moving text that is wider than the cell down to another line, or keeping it all on the same line whether it’s visible or not. If you turn text wrapping on, most programs will automatically re-size the row so that all the lines are visible.
Most programs will move excess text to a new line at a space or hyphen (-) if one is available, just like word processors do.
However, they differ in how they handle text with no spaces or hyphens in it.
Keeping with the alphabet example, there are three main possibilities for handling text with no spaces or hypens. Google Docs will let the excess text run off the edge of the cell, so you’d only be able to see part of it, such as “abcdefgh”. Microsoft Excel will insert arbitrary breaks, so you end up with four or so lines, depending on the exact width of your cell: “abcdefgh”, “ijklmnop”, “qrstuvwx”, “yz”. All those letters that were partially cut off in the horizontal alignment simply wrap to the next line. Lastly, Open Office Calc gives you the option of automatically calculating where hyphens should go. It tries to estimate where the syllables are and breaks the lines there, showing hyphens the way you would if breaking a word across lines in a paragraph. The hyphens aren’t really there, and the estimation isn’t perfect, but it’s worth noting.
I often use this technique when printing, because printing makes the horizontal space more restricted than the vertical space. Even if you’re printing in landscape so that the page is wider than it is tall, your horizontal space for a large table is still more limited than your vertical space. This is because we’re used to going to a new page at the bottom of something, but not at the right. So if it’s a choice between getting some rows moved to a different page, and getting one or more columns moved, then I’ll always choose the rows.
I’m very fond of using text wrapping in headers. Imagine a column that represents per-capita income. The header would be something like “Per Capita Income”, but the values would be something like “$30,000”. That makes the column header around twice as wide as the values in the column. That’s a lot of space to be wasting! Even if you’re not restricted by printing, large amounts of white space can make it hard for the eye to stay on the same row. So if you wrap the text in the header then the column only needs to be as wide as “Per Capita” or “Income”, not both of them combined.