You don't need to type spaces either and keyboards can be more compact as it's about the word shape rather than hitting a particular letter sequence exactly. Stock Android 4.1 version at least seems pretty forgiving provided I hit the correct first letter, a lot of weight in the algo appears to lie with first letter.
And by bizarre you mean fantastic... It's even better in a language like French, where swiping means not having to type in the accents, whereas normally you'd have to do a long press of the letter and then select the accent you want...