One of the coolest new features in Moodle 1.2 is the new Glossary module, by Williams Castillo. This incredibly flexible tool allows teachers and students to build up collections of definitions, that may include multimedia and comments, and each entry can also be graded, contributing to the student's overall grade for the course.
Lastly, every time an entry is
mentioned elsewhere in Moodle the words can be automatically hyperlinked to it,
such as this FAQ entry on file size.