Autosize text to fit a shape in Microsoft Word 2010

Check if this helps.

Create your shape, right-click on it, select "Add Text".  Right-click on the
 object again and select "Format Autoshape".  Click on the "Text Box" TAB and
 click on the first two check boxes (Auto wrap and Auto size shape to text).
 Click back on the "Colors" TAB and click on the "Default for new shapes"
 check box at the bottom.  Click OK.  That ought to do it, if it doesn't, it
 can't be done (except without VBA code).

As far as I can see there is no such option in Word 2010.

Good thing you are using a "Suite" of applications.  The various applications have similar, but not identical features. For example both Word and PowerPoint have "text boxes".  Word can't do what you want, but PPT can. That is probably where you remember seeing the effect happening.

So, try working with that.  Create the text box in PPT at your desired size, select the desired font then enter your text.  If you look in the Home tab font group you will see the font size being used as the text autosizes down.  Then you can either copy the text box from PPT to Word, or just create a sized text box in Word and enter the text using the size shown in PPT.