When you sign a signature line in Word, you add a visible representation of your signature and a digital signature. To add a digital signature line to your document, place the cursor where you want your signature to go. Go to the Insert tab and in the Text group click Signature Line. If you click the down arrow to the right of the Signature Line button, be sure to select Microsoft Office Signature Line.
In the Signature Setup window that appears, type in the text that you would like to appear beneath the signature line:
There are additional checkboxes that you can select:
Once added, the signature line will look like this:
You can add as many signature lines as you want; just repeat the above steps for each one.
When you open a document that requires signing digitally, you will see a signature line, as in the screenshot above. To sign it, right click on the signature line and select Sign.
To sign a Microsoft Office document, you need a digital ID. If you don't have one, you will be prompted to get one when you try and sign a document. How to get a Digital ID for Word.
If you don't already have a digital ID, the chances are that you may want to just insert a textual representation of a signature line that allows you to place a written (not digital) signature and that doesn't require authentication (unlike a digital certificate).
Read about how to add a textual signature line.