Using gets() gives "No such file or directory" error when I pass arguments to my script

It looks like you want to the user to type some input by reading a line from STDIN, the best way to do this is by calling STDIN.gets and not gets. So your line becomes:

word = STDIN.gets.chomp

This is documented as IO.gets. STDIN is an instance of IO.

Right now, you're executing Kernel.gets, which does something different (emphasis mine):

Returns (and assigns to $_) the next line from the list of files in ARGV (or $*), or from standard input if no files are present on the command line.

This appears to behave like STDIN.gets if ARGV is empty, but is not the same thing, hence the confusion.