Seriously? Google Docs is nothing compared to any native word processor. Just look at Apple Pages or Microsoft Word. The kinds of layouts and power you get from those tools is way beyond what anyone has ever been able to do in the browser.
Secondly, yes Google Docs uses HTML for their UI, but it's seriously abstracted I believe as Google Closure though I may be wrong. My point is that HTML and CSS can still be used, but they need abstractions for this type of app. Canvas is just another approach to the same problem.
Do you have links so I can check out some web based word processors that deliver more of a desktop class experience than Google Docs does? Especially one where the UI is done entirely with Canvas?
CappCon had couple awesome demos using all canvas. Example is here: https://github.com/austinsarner/Frappuccino unfortunately it's pretty buggy since it was never finished (due to a lack of funding) I believe a video of it being used was shown in the single video of the talk we released, it can be found on the Cappuccino blog.
Edit: here's a link to a video from very early on in development. http://db.tt/2YX8gpYx
As far as I know, no one has built that yet. But just because canvas allows a greater degree of flexibility, I think it's a worthy experiment for someone to do.
Secondly, yes Google Docs uses HTML for their UI, but it's seriously abstracted I believe as Google Closure though I may be wrong. My point is that HTML and CSS can still be used, but they need abstractions for this type of app. Canvas is just another approach to the same problem.