What is the significance of the word "papacy" to the study of World History?

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The papacy has been tremendously important to world history because the popes were at the head of the Roman Catholic Church.  The Roman Catholic Church was the dominant institution in Western Europe from at least the time of the fall of the Western Roman Empire until the Protestant Reformation in the 1500s. Even after the Reformation, the Church continued to play a major role in European affairs.  Because European countries spread out and colonized much of the rest of the world during this time, the Catholic Church became important in other regions of the world (particularly in Latin America and the Philippines) as well.

For at least 1,000 years, the Roman Catholic Church dominated Western Europe.  It was the only institution, for example, that promoted education to a great degree.  It was the only organization that reached across countries.  Most people in Western Europe believed that it held the key to their eternal salvation.  Therefore, the papacy, which ruled the Church, was supremely important.

The papacy was very influential in causing various important events to happen.  For example, it was Pope Urban II who called for the First Crusade, thus setting in motion one of the major events of World History.  It was the actions of Pope Leo X that helped to bring about the Protestant Reformation, which shook the entire political and societal fabric of Western Europe.  It was Pope Alexander VI who divided the New World between Spain and Portugal. 

Because the Roman Catholic Church dominated Western Europe for much of its history, the papacy has been extremely important in world history.