Using the phrase indicates a deep level of trust, where you accept someone's statement without evidence. When she said she'd return the money, I took her at her word.
Pro Tip 2/3
Potential Risk
Understand that taking someone at their word can be risky if the person is not trustworthy. I took the salesman at his word, but the product didn't work as promised.
Pro Tip 3/3
Not Literal
This phrase is often used figuratively, meaning you don't literally take words, but rather believe the message. When the director said we'd get bonuses, we all took him at his word.