Thanks for the follow-up.
The check mark + "ABC" indicates that the proofing tools for the indicated language has been installed.
Indeed, the upper part of the Language dialog box shows the language which is applied at the insertion point, or to a selection. Since language is a character property, it is theoretically possible for each text character to have a different language, but in reality it is more likely that individual words are formatted differently. That is why I recommend a blinking insertion point, or selecting at most a single word when you want to view the language setting in the text.
I forgot to mention that you can also add the Language indicator to the Quick Access Toolbar (for new messages and replies) in Outlook:
