Starting with an empty LockNote, type in "abc" and then select Undo from the Edit menu (or hit Ctrl-Z). This Undo command works character-by-character, erasing the letter "c."
Now, repeat the experiment, but instead of using the menu bar or the keyboard shortcut for Undo, _right_-click inside the document and choose Undo from the resulting context menu. This Undo command erases the whole word.
There are good arguments for using either character-based or action-based Undo, but the decision should probably apply application-wide, instead of having different Undo methods do different things.
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I tried this on v1.0.4 and it this appears to be fixed. Both undos have the same behaviour--character by character.