Normally, the tab key inserts a tab character (character 9) into the document, which means that the insertion point is moved to the next tab stop. As you probably know, you can add/remove/adjust tab stops manually using the horizontal ruler. Among other things, you can make tab stops aligned in different ways. For instance, by default, in the header/footer, there are two pre-defined tab stops: one centred at the middle of the page, and one right-aligned at the right margin of the page.
Using the ruler, you can also change the indent of the current paragraph, and paragraphs created by typing Enter inside this paragraph. Using the three 'sliders' to the left on the ruler, you can change the left indent, the indent of the first line in the paragraph, and the hanging indent.
Now, however, sometimes when you press the tab key (IIRC, chiefly when the caret is at the beginning of a line that already has text on it), Word figures that you actually don't want a tab character inserted, but rather would like to change the indent. And so Word automatically does that instead. And, of course, this paragraph formatting will reproduce and affect every new paragraph created by pressing Enter inside this paragraph.
To override this, use the 'smart tag' that appears (in recent versions of Word) when Word has automatically changed the indent instead of inserting your tab character. Or, simply press Ctrl+Tab instead of Tab. While pressing Tab means 'please insert a Tab for me, or do something else if you prefer', Ctrl+Tab means 'insert the Tab character for me, and for God's sake, do nothing else'.
Generally, when writing documents, you use indent, and not tab stops. Only in very special circumstances do you use tab stops. One such instance is in the header/footer, where you need to align different parts of a line differently. You can also create primitive tables using tab stops alone, but that technique should be considered highly obsolete.
Also, as you hopefully know, you should never change the formatting (character formatting or paragraph formatting) manually; instead, you should rely on styles. For instance, you could change the 'Body matter' paragraph style so that the first line in every new paragraph starts with an indent, or so that there is 10 pts space between the paragraphs. By changing in the style and not on a particular paragraph (or selection of paragraphs), you make sure that the entire document is formatted homogeneously.
For your question about how to 'reset' a block of text, simply use the ruler to change the indent sliders to the default positions. If you really want to remove all formatting on the paragraph, do Shift+Ctrl+N when the caret is inside the paragraph. Or, better yet, to make sure a paragraph conforms to the style it is supposed to have, reapply the style.