It is often convenient to wrap text appearing on a sketch, such as long variable names. The Variable tool puts variables in a clear box by default. To place a word that is not in a clear box in one right click (or Ctrl + Click) on the word and choose the Shape Clear Box. Vensim will automatically size this to try to achieve a reasonable shape. You can also size the clear box as described above so that the text wraps the way you want it to.
To remove word from a clear box just right click (or Ctrl+Click) on the word and select shape none.