Google Spreadsheets added spell checking, but it doesn’t find misspellings automatically, like in Google’s word processor. You need to click on the Tools menu and select Check spelling. Google starts to find mistakes and suggests corrections from the dictionary. Unfortunately, you can’t add words to the dictionary yet and Google’s suggestions are sometimes terrible.
“The tool will go through all the cells on your sheet, highlighting each cell which has a misspelled word in red. Words that might be misspelled in each cell are underlined in red and can be changed by clicking on them and selecting the right spelling,” explains Google Docs blog.
Google should replace the dictionary-based spell checker with the context-sensitive spell checker that’s already used in Google Wave and Google Search. Instead of using a dictionary, this spell checker extracts data from web pages and Google searches to find a statistical language model, much like Google Translate. This model allows Google to predict mistakes and to determine the most likely corrections.