The regex expression  (\w+)? means "capture one or more word characters... or don't". This is the same as saying  (\w*): "capture zero or more word characters", and if zero characters are captured, you are left with an empty – but perfectly defined – string.

>perl -wMstrict -le
"my %words = map { $_ => 1 } qw($Word $name);
 my $line = '$Word $';
 $line =~ s/(\$(\w*))/exists $words{$1} ? $1 : qq{dollar$2}/eg;
 print $line;
"
$Word dollar
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