Does Google recognize the difference between different meanings of a word in a query?

Matt's answer:
We have a question from Francisco in North Attleboro. Francisco wants to know, Matt, when will Google recognize the difference between boxer, the dog, boxer, the fighter, and boxer-briefs based on the context of the query? And the answer is, we actually do a relatively good job about that. If you only do the query boxer, then we really don’t have any idea which one you mean for that particular query. But suppose you take sterling silver versus Stirling engine, and you misspell both of those with S-T-U-R-L-I-N-G, so you’re misspelling sterling both ways. We’ll correct Stirling engine with and I, and sterling silver with an e. So we do look at the context of queries to try to figure out, if somebody’s talking about GM are they talking about GM the car manufacturer, or GM like genetically modified food, that sort of thing. So Google tries to do a good job about that, but ambiguity is tough, even for human beings sometimes. I wouldn’t claim that we’re perfect, but we do a relatively reasonable job about that. And we’ll keep working to try to do better. Thanks for the question.
by Matt Cutts - Google's Head of Search Quality Team