If the phone does not recognize a word it then stores the word as an optional choice. When the memory space is filled the phone deletes the oldest word to make space for the new word.
Similar to XT9 (the most recent version of T9), iTap is also able to complete words and phrases. iTap will guess the best match based upon a built in dictionary, including words sharing the typed prefix. This dictionary also contains phrases and commonly used sentences. This way the predictive guesses iTap offers are enhanced based upon context of the word that is being typed.
iTap typically uses a different user interface (UI) than T9 does. However, T9 provides an API that can be used to create a similar UI if phone manufacturers decide to do so. iTap provides suggestions for word completions after only one key press in all cases. However, T9 completes custom words after one key press and on most phones other words that users have entered previously can be retrieved after three key presses. T9 enables these UI decisions to be largely up to the phone manufacturer and so far none of them have chosen to mimic the UI of iTap with T9.
US patent 6204848, "Data entry apparatus having a limited number of character keys and method", issued March 20, 2001 https://worldwide.espacenet.com/textdoc?DB=EPODOC&IDX=US6204848 ↩