Word World is about a post-scarcity anarchist society.There's no government, and no money is ever exchanged between characters. Why use money if being literate is the only skill you need to make anything?
Dog is a serial killer.Why else would he have a pit full of letters?
So is the blue CatShe runs a junkyard. We don't see graves anywhere. There are a few more Ducks who show up for one episode and are never seen again. Same with two Monkeys. Why else would she have a "junk" yard full of letters?
Kangaroo is involved in the mob.Anyone who makes problems for the mob is chopped up, and the victim's body parts are distributed around Word World. So this basically makes Kangaroo a combination hitman, cleaner, and chop shop owner.
The letters are Eldritch AbominationsGod like powers? Check. Doing exactly what the user wants with no additional input? Check.
Duck is illiterate or has some sort of learning disorder which will become the subject of a Very Special Episode.There are several episodes where Duck will insist that getting the letters wrong or removing letters from a word doesn't matter. And he always has to relearn this lesson. Clearly, he's too embarrassed to admit he has a disability.