For internal documentation I've found wikis to be quite useful. A wiki has several useful features for this task:
- built-in change-tracking
- doc can be structured as several pages (e.g. one per major section) for easier management; individual pages can then be edited without any need to merge changes into a master document
- some (most?) wiki platforms detect impending edit conflicts; if someone else has the page open for edit you'll find out (so no messy merges later)
- can be accessed by anybody with a browser, on any device (try reading a Word doc or PDF on your phone...)
- if your wiki keeps a "recent changes" page, work is visible and thus more likely to receive additional helpful edits or comments (more collaboration)
It does have some disadvantages -- you have to run a server, and printing isn't very practical. If you ever decided to publish the documentation to a wider audience you'd need to port it to something. But, that said, you could probably script most of that.