aaaahhhhh please put an edit post button
I forgot to attach the images. Here they are

UPDATE:
When I export my word doc as a PDF file, it displays okay. Why is this happening? Both are getting displayed on screen but in Word my font appears like goat droppings but in PDF it's quite smooth

Yes, it is because your font is not hinted.

And to your second question, Adobe Reader is using its own rendering engine independent of the one in Windows.

Thanks and one more thing below what point sizes does hinting become significant?

The format also has some effect— many Windows apps use an older rendering engine for PostScript-based fonts, which generates grayscale rather than subpixel shading.

With hinting, you're really talking pixel size or pixels-per-em (ppem) rather than point size. It's hard to compare the PDF sample since the pixel size is quite a bit larger than in Word (maybe it was zoomed?).

I assuming you're looking at this as a ttf in a windows environment. Although which version of Windows would be helpful.

Arial is hinted as low as 7ppm, while Calibri is hinted down to 9ppm (I believe). They're also hinted in VTT (using a lot of time and effort), where the diagonals can be controlled better than is possible using FL hinting.

Jason C

Other factors may include - what video card and drivers are in use; what type of display; whether Cleartype or similar OS functions are being utilized.

I am on win 7 and using OpenType PS format as the conversion to true type is making the fonts look very rough and jagged. So that problem is because the font is unhinted?

So that problem is because the font is unhinted?

The problem with the appearance of the font at small sizes in Microsoft Word is likely because (1) it is unhinted and (2) the fonts to which you're comparing it have been extensively hinted in TrueType format, which provides far greater control than PostScript hinting and uses a different rasterizer. Office 2013 will use the newer DirectWrite engine, which provides improved subpixel rendering for both formats.

While looking at FontLab Tools--> Options(F10) dialog box and going to the Generating OpenType and TrueType --> OpenType(.otf) submenu, the option Autohint unhinted glyphs is checked on.
This means that my OpenType PS font is getting automatically Type1 hinted upon export, right?
So the font that I am using is Type1 automatically hinted and hence i can safely conclude that automatic tyoe1 hints are bad, right?

T

As gargoyle mentioned, TrueType hints offer greater control than Type1 hints, and this is particularly noticeable at small sizes. No matter how good your hints are, they aren't going to stand up to a manually (well) hinted TrueType font at smaller sizes. Some of these fonts have literally man-years put into hinting them.

i can safely conclude that automatic tyoe1 hints are bad, right?

It depends on the font, but it's certainly true that automatic hinting at the time of generation — in either format — can often result in poorer, more irregular rendering than even a completely unhinted font. Better results may be achieved by autohinting the font before generation, possibly tweaking some of the options and values under Hinting Settings in Font Info, and inspecting/revising the hints before generating the final font.

For FontLab-specific instructions on optimizing the process, see Adam Twardoch's Autohinting guide. For a better handle on basic hinting concepts such as alignment zones and standard stems, Miguel Sousa's presentation on PostScript hints provides a nice visual intro.