"Why TeX is not WYSIWYG" outlines the reasons (or excuses) for the huge disparity of user interface between "typical" TeX environments and commercial word processors.
Nowadays, at last, there is a range of tools available that try either to bridge or to close the gap. One range modestly focuses on providing the user with a legible source document. At the other extreme we have TeXmacs, a document processor using TeX's algorithms and fonts for both editor display and printing. TeXmacs does not use the TeX language itself (though among other formats, LaTeX may be exported and imported). A bit closer to LaTeX is LyX, which has its own editor display and file formats as well, but does its print output by exporting to LaTeX. The editor display merely resembles the printed output, but you have the possibility of entering arbitrary LaTeX code. If you use constructs that LyX does not understand, it will just display them as source text marked red, but will properly export them.
Since a lot of work is needed to create an editor from scratch that actually is good at editing (as well as catering for TeX), it is perhaps no accident that several approaches have been implemented using the extensible emacs editor. The low end of the prettifying range is occupied by syntax highlighting: marking TeX tokens, comments and other stuff with special colours. Many free editors (including emacs) can cater for TeX in this way. Under Windows, one of the more popular editors with such support is the Shareware product winedt. Continuing the range of tools prettifying your input, we have the emacs package x-symbol, which does the WYSIWYG part of its work by replacing single TeX tokens and accented letter sequences with appropriate-looking characters on the screen.
A different type of tool focuses on making update and access to previews of the typeset document more immediate. A recent addition in several viewers, editors and TeX executables are so-called 'source specials' for cross-navigation. When TeX compiles a document, it will upon request insert special markers for every input line into the typeset output. The markers are interpreted by the DVI previewer which can be made to let its display track the page corresponding to the editor input position, or to let the editor jump to a source line corresponding to a click in the preview window.
An emacs package that combines this sort of editor movement
tracking with automatic fast recompilations (through the use of dumped
formats) is
WhizzyTeX
which is best used with a previewer by the
same author. A simpler package in a similar spirit is called
InstantPreview and makes
use of a continuously running copy of TeX
(under the moniker of TeX daemon) instead of dumping formats to
achieve its speed.
Another emacs package called preview-latex tries to solve the problem of visual correlation between source and previews in a more direct way: it uses a LaTeX package to chop the document source into interesting fragments (like figures, text or display math) which it runs through LaTeX and replaces the source text of those fragments with the corresponding rendered output images. Since it does not know about the structure of the images, at the actual cursor position the source text is displayed while editing rather than the preview. This approach is more or less a hybrid of the source prettifying and fast preview approaches since it works in the source buffer but uses actual previews rendered by LaTeX.
A more ambitious contender is called TeXlite. This system is only available on request from its author; it continuously updates its screen with the help of a special version of TeX dumping its state in a compressed format at each page and using hooks into TeX's line breaking mechanism for reformatting paragraphs on the fly. That way, it can render the output from the edited TeX code with interactive speed on-screen, and it offers the possibility of editing directly in the preview window.
That many of these systems occupy slightly different niches can be seen by comparing the range of the emacs-based solutions ranging from syntax highlighting to instant previewing: all of them can be activated at the same time without actually interfering in their respective tasks.
The different approaches offer various choices differing in the immediacy of their response, the screen area they work on (source or separate window), degree of correspondance of the display to the final output, and the balance they strike between visual aid and visual distraction.
This question on the Web: http://www.tex.ac.uk/cgi-bin/texfaq2html?label=WYGexpts